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Volume 10 No. 25


Adidas is "finding it tough to make its Reebok store franchisees in India" accept terms of the new business agreement, according to Vivek Sinha of the HINDUSTAN TIMES. The "discontent among Reebok franchisees runs so deep that many have offered deep discounts, as high as 80%, in an effort to clear stocks and settle their accounts with the company." Around 500 franchisees own and operate close to 900 Reebok stores across India. A Delhi-based Reebok franchisee said, "We are in the process of settling our accounts with the company. The deep discount is to sell off the products." A Reebok storeowner said, "The company is offering us flat 35% margin on total sale proceeds. Earlier we used to get around 18% on our total investments and the company took care of rent and staff salaries as well" (HINDUSTAN TIMES, 1/15).

The latest bidders for surfwear company Billabong "plan to break up the business" if they succeed with a A$527M ($556M) takeover offer, according to Blair Speedy of THE AUSTRALIAN. U.S. clothing maker VF Corp. and bidding partner Altamont Capital Partners offered to match Billabong Americas President Paul Naude's indicative takeover offer of A$1.10 a share. VF said in a statement that its "primary interest in the transaction is in the Billabong brand." Altamont, a U.S.-based fund with $500M under management, said that it wanted Billabong's other brands and related assets, including skate brand Element, swimwear brand Tigerlily and streetwear brand RVCA (THE AUSTRALIAN, 1/16).

VF BID HAS LEGS: In Sydney, Colin Kruger reported analysts said that the VF/Altamont bid "has a lot of credibility." Deutsche Bank analyst Michael Simotas said, "We have long thought the Billabong brands would be a sensible fit for VF Corp. given its attraction to global brands, which are not broken but have potential to improve and its other investments in the action sports space (Vans and Reef)." The company's shares rose as much as 14.2% after emerging from a trading halt late Tuesday morning. They were recently up 12.4% at A$0.95. JP Morgan retail analyst Shaun Cousins said, "We think this is a positive development for BBG, now with two credible private equity and industry bidders" (SYDNEY MORNING HERALD, 1/15).  In N.Y., Gavin Lower wrote on the WALL STREET JOURNAL's Deal Journal Australia blog VF Corp. is "no stranger to bidding for brands that appear to have lost their way, or face more intensive competition." Its $2.3B bid for Timberland in '11 came at a time when the boot maker was "grappling with rising costs of raw materials, labor and transportation costs." Parallels can be "easily drawn between the pressure facing Timberland then and Billabong now" (WSJ, 1/15).