Xcel Hawaii Inc., a Hale'iwa-based wetsuit maker that began in its founder's bedroom 25 years ago and grew into a worldwide surf brand, has been acquired by Australian surfwear giant Billabong International Ltd.

Terms of the transaction weren't disclosed, but founder and former owner Ed D'Ascoli will remain with the operation and continue to run Xcel from its base in Hawai'i. All of the company's 46 workers in Hawai'i and 7 in California will be retained.

"We're all excited," said D'Ascoli, who said he was looking for a way take the company to the next level of its growth with Billabong, Australia's largest surf company, with shares that trade on the Australian Securities Exchange.

"They like Hawai'i and have businesses in Hawai'i already."

The acquisition marks a new era for Xcel, which D'Ascoli founded with a $1,000 investment and $5,000 bank loan in the back room of a Sunset Beach home. Since that humble start, D'Ascoli has expanded the company into a number of different watersports markets, including vests for wakeboarders, tops and shorts for paddlers, wetsuits for divers and apparel that blocks harmful sun rays. Its Infiniti series surf wetsuit was selected as the 2006 Wetsuit of the Year by the Surf Industry Manufacturers Association.

Besides selling through its own shops in Hale'iwa and at Ward Centers in Kaka'ako, the company also operates a warehouse in Huntington Beach, Calif. for distribution on the Mainland. It has international distributors and license agreements in Australia, New Zealand, Japan, Europe, Canada, Brazil, Chile, Tahiti and other countries.

D'Ascoli said the business has enjoyed good growth during the past four years but that he hasn't had the success he'd like with his foreign expansion, which will be the next growth segment for Xcel. Already the company is considered either the No. 2 or 3 U.S. surf wetsuit maker.

He said Billabong can help provide the funding and connections to make Xcel more of a factor in international markets.

"In order to grow it takes a lot of money and commitment," said D'Ascoli. "It was at a stage where it was beyond what I could do."

Billabong had sales of $1.05 billion last year and like many surf companies maintains strong ties with Hawai'i, the birthplace of modern surfing. It previously bought Hawai'i-based Honolua Surf Co. in 2004, paying up to $15 million for the retailer's 17 local stores and 2 Las Vegas locations. It also sponsors Hawai'i surfers and a major surfing competition at Pipeline.

D'Ascoli said one of the reasons why he decided to sell to Billabong was its commitment to brands.

He said Honolua Surf Co. has kept its identity and that he expects the same freedom when it comes to maintaining Xcel's brand focus. He said the acquisition will also free him up to concentrate more on research and development of products.

Billabong said the acquisition will add to its earnings this year and that it anticipates Xcel will contribute about 1 percent to group revenue in the 2007-2008 financial year.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.