Surfwear Firm Considers $48-Million Buyout Offer
Quiksilver, a Newport Beach surfwear and sportswear maker, said Friday that it is considering a plan to take the company private in a leveraged buyout valued at $48 million.
Founded 10 years ago by company President Robert McKnight, then a 24-year-old surfer and lifeguard, Quiksilver has grown steadily as a purveyor of trendy sportswear. For the first nine months of 1988, the company posted sales of nearly $36.9 million and earned $3 million.
The firm said that Wedbush Securities, a Los Angeles brokerage, proposed the leveraged buyout to Quiksilver management. The proposal calls for Wedbush to finance the purchase of Quiksilver’s 6.1 million shares of stock at $8 a share in cash.
McKnight, who owns 10.5% of Quiksilver’s stock, is the company’s second-largest shareholder, according to documents filed with the Securities and Exchange Commission. Randall D. Hunt, an early investor in the company, owns 12%. Other large shareholders include John Warner, chairman and chief executive; Lawrence A. Crowe, chief financial officer, and Charles Crowe, a designer for the company.
Ranked 11th on List
While Quiksilver has maintained its original image as a supplier of trendy surf shorts to small specialty shops, it has expanded through the introduction of an array of sportswear sold in upscale department stores such as Nordstrom in California and Bloomingdale’s in New York.
Earlier this year, Business Week magazine ranked Quiksilver 11th out of 100 leading small businesses, based on sales and earnings growth.
Quiksilver stock was suspended from trading Friday afternoon to give investors time to react to the announcement of the buyout proposal. The stock closed at $6.875, up 50 cents for the day.
Team Seen Shrinking
Quicksilver insiders currently own about half of the company’s stock. The company said the buyout plan calls for “certain members” of the management team to hold 51.5% of the private company, but no further details were provided. Quiksilver officials could not be reached for comment.
Adelle Demko, a vice president for corporate finance at Wedbush Securities, declined to elaborate on the on the transaction.
Frank Podbelsek, a securities analyst with Paine Webber Inc. in Los Angeles, said that past conversations with management have led him to believe that the buyout proposal would involve reducing the management team. If that occurs, the remaining executives would wind up with a bigger stake in the firm.
“What it looks like to me is that there may be a few large insider shareholders bought out along with the public,” said Podbelsek.
The rest of the company would be owned by Wedbush and a syndicate of creditors, Podbelsek said.
