In a story we posted June 16, 2010 about Zumiez expanding into Canada we mentioned jokingly that if Zumiez was interested in moving north of the border “wouldn’t it just be easier for Zumiez to buy West 49.”
Now, it appears that our joke could become a reality as West 49 is reporting that Zumiez has offered the Canadian action mall retailer a buyout “in excess” of the $1.30 offered by Billabong.
The Company’s board, after consultation with its outside legal and financial advisors, has concluded that the Zumiez proposal would reasonably be expected to lead to a superior proposal. However, the Company is concerned with Zumiez’s previously stated intent to enter the Canadian market, and therefore the board has instructed the Company’s management to seek to protect the Company’s competitive position. Subject to the terms of the existing agreement with Billabong International Limited, the Company’s special committee intends to seek to negotiate with Zumiez to determine if its offer can become a firm offer that is financially superior to the transaction with Billabong and that West 49 can otherwise treat as a superior proposal under the terms of the existing agreement with Billabong.
Guess that would give Billabong a few extra dollars to spend elsewhere. Even better: what if Billabong just waits for Zumiez to cover the West 49 acquisition costs and then buys the whole thing two years down the road when mall retailers are even cheaper. . . Follow the jump for the entire release.
West 49 Inc. receives proposal from Zumiez, Inc.
Toronto Stock Exchange Symbol: WXX
BURLINGTON, ON, July 9 – West 49 Inc. (TSX: WXX) (the “Company”), Canada’s leading action sport retailer, today announced that Zumiez, Inc., a U.S.-based action sports retailer, has advised the Company that, subject to a satisfactory due diligence review in its sole discretion, it “would be prepared to make an offer, that would not be subject to a financing condition, to acquire all of the outstanding common shares and preferred shares of West 49 for a cash price in excess of C$1.30 per share.” Zumiez, Inc. has further indicated that it believes that its acquisition proposal would reasonably be expected to lead to a superior proposal, and has indicated that it would like to enter into a confidentiality and standstill agreement with the Company.
The Company’s board, after consultation with its outside legal and financial advisors, has concluded that the Zumiez proposal would reasonably be expected to lead to a superior proposal. However, the Company is concerned with Zumiez’s previously stated intent to enter the Canadian market, and therefore the board has instructed the Company’s management to seek to protect the Company’s competitive position. Subject to the terms of the existing agreement with Billabong International Limited, the Company’s special committee intends to seek to negotiate with Zumiez to determine if its offer can become a firm offer that is financially superior to the transaction with Billabong and that West 49 can otherwise treat as a superior proposal under the terms of the existing agreement with Billabong. There can be no assurance that Zumiez will in fact make a firm proposal or, if it does, as to the price, terms or conditions thereof. In the event that Zumiez does make a proposal that the board determines constitutes a superior proposal which the Company wishes to accept, Billabong would have the right, but not the obligation, to match such proposal within a 5 business day period.
The special committee and the board as a whole confirm that they continue to support the Billabong transaction and confirm their unanimous conclusion that the transaction with Billabong is in the best interests of the Company and is fair to the Company’s securityholders and their recommendation that securityholders vote in favour of the Billabong transaction, under which the Company’s common shares and preferred shares would be acquired at C$1.30 per share. The agreement with Billabong remains in effect at this time. Further details of the Billabong transaction are expected to be included in a proxy circular to be mailed to shareholders in due course.
About West 49 Inc.
West 49 Inc. is a leading Canadian specialty retailer of apparel, footwear, accessories and equipment related to the youth action sports lifestyle. The Company’s stores, which are primarily mall-based, carry a variety of high-performance, premium brand name and private label products that fulfill the lifestyle needs of identified target markets, primarily tweens and teens. At May 1, 2010, the Company operated 138 stores in nine provinces, under the banners West 49, Billabong, Off The Wall, Amnesia/Arsenic and D-Tox. The Company’s common shares are listed on the Toronto Stock Exchange under the symbol WXX. The Company has approximately 64 million common shares outstanding.
