What happened: Lululemon acquires American company in US$500-million deal
Why it matters: The acquisition comes as clothing retailers face uncertainty amid the COVID-19 pandemic
Lululemon Athletica Inc. (Nasdaq:LULU) is stretching its own corporate brand somewhat with the acquisition of a home-fitness company.
The Vancouver-based company best known for its athleisure wear announced Monday (June 29) it’s reached an agreement to take over Mirror (Curiouser Products Inc.) in a deal worth US$500 million.
The New York firm, founded in 2016, specializes in an interactive workout platform that features live and on-demand classes.
The acquisition comes at a time when many fitness centres remain closed or else highly restricted by lines and schedules amid sanitization concerns brought on by COVID-19.
Prior to buying the home-fitness company, Lululemon was an investor in Mirror dating back to mid-2019.
“This acquisition will further expand the content creation partnership between the two brands and will help Lululemon, Mirror and Lululemon ambassadors reach new guests,” Lululemon said in a release.
The West Coast company added that the purchase price is expected to be paid from its primary sources of liquidity, which include over $800 million in cash, its existing $400 million revolving credit facility and a one-year $300 million revolving credit facility.
The acquisition marks what is perhaps CEO Calvin McDonald’s most notable move since his hiring in August 2018.
But it also comes at an uncertain time for clothing retailers like Lululemon even as much of the global economy slowly reopens amid the pandemic.