West 49 Inc. stock is back to where it was less than a week ago after an American sports apparel retailer decided Wednesday against making a bid for the Canadian sportswear firm.
Shares of West 49 tumbled 8.5% in early Wednesday afternoon trading, putting it back near the level it was at before Zumiez Inc. entered the picture last week and flirted with the idea of becoming a potential acquirer.
Zumiez said Friday it might be prepared to top a $99-million takeover offer that West 49 had received from Australia’s Billabong International.
However, Zumiez changed its tune Wednesday, saying it’s no longer interested because it wasn’t able to agree with West 49 on a due diligence process, which would have provided the U.S. company with an insider look at the firm’s organization.
Zumiez had initially said it would consider offering more than Billabong’s bid after a successful due diligence review.
But West 49 expressed concern that Zumiez could be playing the role of an interested bidder to gain detailed information about the organization that it could use for its own competitive purposes.
It cited Zumiez’s previously announced plans to enter the Canadian market as tangible evidence that the bid was suspect.
Alongside Billabong, all three companies target similar customers with sporting goods such as skateboards and snowboards and related clothing and fashion accessories.
Billabong has grown rapidly in recent years and now operates more than 300 stores across North America, South America, Europe, Asia and Australia. The West 49 transaction will add 138 mall-based stores and boost the Australian company’s bottom line in 2011.
Billabong said in its original announcement that it plans to keep key West 49 management, including West 49 president and CEO Sam Baio, who will continue to lead the business.
