Australian clothing and footwear maker Pacific Brands Ltd. (PBG.AX) said Monday it has received an unsolicited takeover offer from U.S.-based private equity firm KKR & Co. L.P. (KKR). Financial terms of the offer were not disclosed. Following the news, Pacific Brands' shares are currently gaining more than 15 percent on the Australian stock exchange.
Pacific Brands said that the unsolicited offer from KKR is regarding a possible acquisition of all of the company's issued capital. The company's board, together with its advisers Flagstaff Partners and Minter Ellison, is considering the offer and is holding preliminary talks with KKR.
The company's brands include Bonds and Slazenger, in addition to clothing labels Berlei, Hard Yakka and King Gee, and the Sheridan range of bed linen.
Australia's retail sector has been struggling in recent times due to weak consumer confidence, cheap imports and a strong Australian dollar. In late August, Pacific Brands reported a fiscal year 2011 net loss of A$131.9 million, compared to net income of $52.7 million in the previous year. The company attributed the loss to the impact of non-cash impairment charges and restructuring cots. Sales declined 7.3 percent to A$1.61 billion from A$1.74 billion in the prior year. Looking ahead, the company said earnings in fiscal 2012 are expected to be below fiscal year 2011, particularly in the first half.
Pacific Brands was acquired by private equity firms CVC Asia Pacific and Catalyst Investment Management from Pacific Dunlop for A$730 million in 2001. The company was listed on the Australian stock exchange in 2004 that valued it at A$1.3 billion. However, Pacific Brands' current market capitalization is A$600 million.
KKR closed Monday's trading on the NYSE at $13.59, up $0.19 or 1.42 percent on a volume of 1.04 million shares.
On the Australian Securities Exchange, PBG.AX is trading at A$0.64, up A$0.09 or 15.18 percent on a volume of 6.38 million shares.
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