June 30, 2010 / 10:55 AM / in 7 years

UPDATE 2-Billabong to buy West 49, expand Canadian presence

* All-cash deal valued at C$83.2 mln

* West 49 shareholders to get C$1.30/shr - 136 pct premium

* Transaction expected to close in September

TORONTO, June 30 (Reuters) - Australian clothing retailer Billabong International Ltd BBG.AX said it would acquire Canadian peer West 49 WXX.TO in a C$83.2 million all-cash deal.

The acquisition of West 49, one of Billabong’s retail partners in Canada, will allow the Australian company to increase the availability of its brands in the action sports market in North America.

Billabong said it is acquiring Burlington, Ontario-based West 49 for C$1.30 per share, a 136 percent premium to the company’s closing price of 55 Canadian cents a share on Tuesday.

The transaction has been unanimously recommended by West 49’s board of directors. The deal, which is subject to approval by the company’s security holders, is expected to close in September.

Billabong, which has grown its global presence steadily over the last decade through a series of bolt-on acquisitions, said buying West 49 is a logical addition to help it achieve its long-term business strategy. Billabong currently operates more than 300 stores spread across North America, South America, Europe, Asia and Australia.

The company said the acquisition of the 138 primarily mall-based retail outlets operated by West 49 will help boost its earnings in 2011.

“West 49 is a complementary business and promises to be an ideal Canadian distribution platform for Billabong to showcase its brands and extend its reach,” Billabong Chief Executive Derek O‘Neill said in a statement.

Billabong, which plans to fund the deal with its existing debt facilities, said it has entered into support agreements with major West 49 security holders that are in favor of the deal.

West 49, which has about 64 million common shares outstanding, said its preferred shareholders will receive accrued and unpaid dividends on their shares.

Billabong said it plans to retain key West 49 management, including founder and CEO Sam Baio, who will continue to lead the West 49 business. (Reporting by Euan Rocha; additional reporting by Koustav Samanta in Bangalore; editing by John Wallace)

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