Billabong announced that it has entered into a binding agreement with a consortium of investors to sell 51% of SurfStitch.com and 100% of Swell.com. The consortium includes Surfstitch founder Justin Cameron.
Surfstitch and swell are both online retail sites that specialize in surf apparel. Surfstitch focusing on Australia and Europe and swell covering North America.
Upon completion, Billabong will receive more than $35 million as a result of the transactions, comprising sale proceeds, loan repayments and other consideration. Billabong will also enter into agreements for the continued wholesale supply of products to SurfStitch and Swell.
The sale will allow the company to narrow its strategic focus and to invest in building its mono-brand ecommerce and omni-channel businesses.
The company expects the transactions to be earnings accretive to Billabong in terms of both EBITDA and net earnings, although the extent of the improvement is contingent upon the future sales to SurfStitch under the new supply arrangements.
“The transactions align with the seven point turnaround strategy announced at our AGM last December,” said Billabong CEO Neil Fiske.