Nixon Enters Joint Venture With TCP

Nixon co-founders Chad DiNenna and Andy Laats are smiling today as they find themselves back on the list of company owners after a deal announced today which valued the company at US$464 million.

Billabong has entered into definitive agreements with Trilantic Capital Partners (“TCP”) to establish a joint venture to accelerate the growth of the Nixon brand globally. . . Billabong and Trilantic will each hold approximately 48.5% of Nixon, a leading brand in the global youth accessory market, and management will purchase the remaining 3.0% stake. . . Billabong expects to realise net proceeds of approximately US$285 million1 as a result of this transaction, all of which will be used to repay debt.

In other words, Billabong sold half of Nixon to a private equity fund to raise cash. But, Laats and DiNenna will stay on as CEO and EVP of Marketing (and own three percent of the company) so everything is as it should be, it appears. One question: does this mean Nixon could have two different private equity firms as owners? That could get interesting.

For more official details on the deal follow the jump. [Photo: Todd Richards]BILLABONG ESTABLISHES NIXON JOINT VENTURE;
VALUES NIXON AT US$464 MILLION

GOLD COAST, 17 February 2012: Billabong has entered into definitive agreements with Trilantic Capital Partners (“TCP”) to establish a joint venture to accelerate the growth of the Nixon brand globally.

Billabong and Trilantic will each hold approximately 48.5% of Nixon, a leading brand in the global youth accessory market, and management will purchase the remaining 3.0% stake.

Billabong expects to realise net proceeds of approximately US$285 million1 as a result of this transaction, all of which will be used to repay debt.

The transaction values Nixon at approximately US$464 million, representing a multiple of approximately 9.2x LTM EBITDA2.

The transaction reflects the significant strategic value and strong potential of the Nixon brand.

Derek O’Neill, CEO of Billabong, said: “Nixon has achieved strong growth since Billabong’s acquisition of the brand in 2006. Nixon is now well placed to grow deeper into accounts such as existing Nixon retailers, specialty watch and fashion retailers as well as select consumer electronics stores. The partnership with Trilantic gives Nixon the financial backing and impetus to achieve this growth.”

Charlie Moore, partner at TCP, said: “We are thrilled to be partnering with Billabong and with Nixon’s founders, Andy Laats and Chad DiNenna, to support Nixon in its next phase of growth. Nixon is the pre-eminent watch and accessories brand in the action sports category with tremendous brand loyalty and momentum. We look forward to working with the Nixon team as it expands the reach of its brand and products into new channels and markets.”

Nixon’s Co-Founders, Andy Laats and Chad DiNenna, will continue their roles as CEO and EVP of Marketing, respectively, while together holding a significant equity investment alongside the rest of Nixon’s senior management team.

Andy Laats said: “This is exciting news. To be back in the owner’s seat with this committed team in addition to the forces of Billabong and Trilantic represents the next step in our continued mission to elevate Nixon to a world-class brand.”

The transaction will be funded through equity from TCP and its affiliates of US$140 million, as well as equity from management.

In addition, US$175 million of underwritten debt financing has been obtained to fund the transaction. The debt package is non-recourse to Billabong and will not be consolidated.

Billabong acquired Nixon in 2006 for approximately US$55 million and a deferred payment of approximately US$76 million in FY 2012.

The transaction is expected to close within 90 days, subject to certain anti-trust approval and customary closing conditions.
About Nixon Inc.

Nixon is a leading brand in the global youth accessory market. It has been voted #1 best seller in the USA and Canada, and has been the recipient of numerous industry awards. The brand is carried by more than 70% of US surf and skate retailers and is supported by an outstanding team of professional board sport athletes and entertainers. Over the last 10 years, the Nixon brand has established a reputation for shaping trends in the action sports and youth fashion arena.