Lululemon Is Surging Because Chip Wilson Did This
NEW YORK ( TheStreet) - Lululemon Athletica
Wilson owns approximately 40.2 million shares of the yoga apparel maker's common stock, representing approximately 27.7% of the outstanding shares. He is selling 20.1 million shares, or 13.85% of the company's shares, to Advent for a total of $845 million.
Lululemon's board of directors has given its "full support" of the transaction, according to a press release announcing the deal.
As part of the agreement, David M. Mussafer, Advent's managing partner will become co-chairman of Lululemon's board, serving alongside its current chairman Michael Casey. Advent's managing director Steven J. Collings will also be appointed to Lululemon's board, expanding its total number of directors to 12 from 10 currently.
Advent is no stranger to Lululemon. The private equity firm was previously invested in the company from 2005 through 2009. During that time, Advent "worked closely with Mr. Wilson and five of the company's current board members, including Chairman Michael Casey, to help the company expand from a regionally focused retailer to a globally recognized premium apparel brand," the release stated. The firm has $32 billion in assets under management and has invested in more than 290 buyout transactions in a variety of sectors across the world over the past 30 years.
Mussafer previously served as a director on Lululemon's board from 2005 to 2010, while Collins was a director from 2005 to 2009, the release said.
Additionally, Wilson and Advent have agreed to "certain standstill provisions" for the company's 2015 and 2016 annual stockholder meetings, which means they won't attempt a buyout - yet. Rather, the company will work with an independent retail expert to "evaluate and make recommendations regarding the lululemon board's committees, policies and procedures" following the completion of the stock transaction.
"Advent is a strong partner that knows lululemon and our culture and will be an incredibly helpful addition to the Board as we build an even stronger company," Wilson said in the release. Lululemon is "well positioned to successfully execute on its strategic goals, and I look forward to working alongside the entire board and management team as we focus on leveraging our core values of product and innovation to enhance value for all shareholders."
The stock purchase agreement is expected to close in 30 to 60 days, and Mussafer and Collings will take their place on the board once the transaction is completed.
Wilson hired Goldman Sachs