The Billabong International Limited (ASX: BBG) share price has been one of the star performers on the market on Friday with a 21% gain to 94.5 cents.
This latest gain has limited its year-to-date decline to approximately 25%.
Why are its shares higher?
This morning the embattled surf wear retailer advised that it has received a confidential, indicative, and non-binding proposal from Boardriders, Inc. to acquire all of the shares in Billabong it does already own at a price of $1.00 cash per share.
According to the release, Boardriders, the company behind rival surf wear brand Quiksilver, has a 19% interest in the company through its association with Oaktree Capital Management.
The board has decided to grant due diligence access to Boardriders to enable it to put a formal proposal to Billabong. Management expects the process to take a number of weeks and has warned shareholders that there is no certainty that a deal will go ahead.
What now?
Considering the sharp decline in its share price this year, the offer does strike me as being opportunistic. However, due to the state of the retail industry and Billabong's struggles, it might be the best that investors can hope for.
If I owned Billabong shares I would consider selling them today and reinvesting the funds back into the market through top retail shares such as RCG Corporation Ltd (ASX: AX1) and Premier Investments Limited (ASX: PMV).
