Billabong put a trading halt on its shares yesterday after the company saw 20% of it’s price disappear in the morning. Starting at 81c, it got down to 63c before rebounding to 69.5c just before lunch when the halt came into effect. There was no information about why the sudden drop occurred and the company was due to start trading again once they could provide more information about the situation. There’s still no definitive answer but there’s two possibilities:
1. Rumors swirling that one or both of the potential buyers for Billabong, which have a deadline of next week to submit their bids, was going to pull out.
2. Or that one or both were going to offer less than the $1.10 indicative price that they have put on the table so far.
This is added to by some recent (scary) analysis from Credit Suisse’s analyst Grant Saligari that without the buyers, the company has a weighted value of 59c and that if earnings were to fall to $50 million (currently expected to be between $75 – $85 million) it would have an equity value of zero. Those numbers are up for argument but some people holding a few shares might be getting a little nervous right now.
If you want to read more, this article is worth a look.