Australia-based Billabong International Ltd. has rejected a $825.3 million buyout offer from private equity firm TPG Capital Partners LP but left the door open for a higher bid.

Fort Worth, Texas-based TPG Capital’s bid earlier this month was rejected by the Billabong board and company founder and major shareholder Gordon Merchant.

Billabong, which operates Irvine-based Billabong USA, makes clothes, shoes and accessories under several brands including Element, RVCA, Von Zipper and Honolua.

A statement from Billabong said the TPG bid “does not reflect the fundamental value of the company,” and added Merchant also believed the offer significantly undervalued the company.

Billabong is giving TPG a chance to revise its bid with discussions ongoing, the company said.

Billabong has battled a tough retail environment along with European debt issues that have impacted consumer spending.

The company agreed to sell off its Encinitas-based watch and accessories business Nixon Inc. earlier this month to New York private equity firm Trilantic Capital Management LLC. The deal, which valued Nixon at $464 million, is expected to provide Billabong with $285 million to be used toward the repayment of its debt.

Billabong management said it now believes the company is on “much more secure footing and is well-positioned to grow” if there is a retail rebound and comeback in consumer spending.