Lululemon Athletica Inc. founder Chip Wilson will sell 20.1 million shares in the yogawear giant, or 50% of his holding, to private equity firm Advent International for US$845 million, Lululemon announced after the close of trading August 7.
The announcement pushed shares (Nasdaq:LULU) up more than 9%, to US$42.85, after hours. Shares were down 2.4% to US$39.03 during the regular session. Wilson’s sale valued each share at about $42.04.
Shares for Lululemon have dropped more than 45% over the past year.
Wilson, who retains a 13.85% stake in Lululemon, had reportedly been maneuvering behind the scenes to potentially be part of a transaction to take the company private.
He lashed out at the retailer’s board of directors in June, saying that new chairman Michael Casey and director RoAnn Costin were too focused on short-term growth. He then voted against their reelection to the board.
The transaction includes a side-agreement from both Wilson and Advent not to stage a proxy contest or a hostile acquisition strategy until after an annual shareholder meeting in 2016 – about a year and a half away.
Wilson did not immediately respond to Business in Vancouver’s interview request.
The transaction marks the return of Advent into the Lululemon fold.
Advent, which is a large and experienced global private equity investor, previously invested in Lululemon in 2005 and worked closely with Wilson and five of the company’s 10 current board members, including Casey, to help Lululemon expand from being a Vancouver fashion phenomenon, which started in 1998, in a second-storey studio on West Fourth Avenue, into a global brand known for premium yogawear.
Advent sold the last of its original investment in Lululemon in June 2009.
Advent managing partner David Mussafer and managing director Steven J. Collins will be appointed to Lululemon’s board when the stock sale transaction closes – likely within the next two months. Those additions would increase the size of Lululemon’s board to 12 directors.
“We are pleased to have the opportunity to work together again with Chip and the entire Lululemon board and management team, with whom we have successfully collaborated in the recent past,” Mussafer said in a release.
Wilson originally sold 48% of Lululemon for $108 million to two private equity firms in 2005. He shed a further 12% two years later as part of the company’s IPO. He then told BIV that he had “given” shares to employees.
Wilson has been an active philanthropist.
First came his Chip’s Not Dead Yet Memorial Mile, which raised hundreds of thousands of dollars for B.C. Children’s Hospital. Then he started imagine1day by endowing that charity, which raises money to help improve literacy in Africa, with a $10 million endowment.