Lululemon Athletica inc. Founder Dennis J. (Chip) Wilson has agreed to sell half his shares in the apparel maker equal to a 13.85 percent stake of the company to Advent International for approximately $845 million. The transaction has received the full support of the Lululemon Board of Directors on which Wilson sits.
Advent, one of the largest and most experienced global private equity investors, previously invested in Lululemon in 2005 and worked closely with Wilson and five of the company’s 10 current Board members, including Chairman Michael Casey, to help the company expand from a regionally focused retailer to a globally recognized premium apparel brand. Advent completed its exit from the original investment in June 2009.
Lululemon, Wilson and Advent also entered into a support agreement under which Advent Managing Partner David M. Mussafer and Managing Director Steven J. Collins will be appointed to Lululemon’s Board of Directors, effective as of the closing of the stock sale transaction, expanding the Board from 10 to 12 members. Mr. Mussafer also will be appointed Co-Chairman of the Lululemon Board, serving alongside Mr. Casey, and will serve on the Boards Nominating and Corporate Governance Committee. Mr. Collins will serve on the Boards Compensation Committee. Mr. Mussafer previously served as a Director on Lululemon’s Board from 2005 to 2010; Mr. Collins served as a Director from 2005 to 2009.
Under the support agreement, the parties will engage an independent expert to evaluate and make recommendations regarding the Lululemon Board’s committees, policies and procedures over the course of 90 days following the completion of Advents stock purchase. With this agreement, Wilson, Lululemon and Advent have affirmed their commitment to ensuring best practice corporate governance. In addition, Wilson and Advent have agreed to certain standstill provisions for the company’s 2015 and 2016 Annual Stockholder Meetings.
Wilson currently beneficially owns 40.2 million shares of Lululemon common stock, representing approximately 27.7% of the companys outstanding shares. Once the stock sale agreement is completed, Advent and Wilson will each beneficially own approximately 20.1 million shares of Lululemon common stock, or approximately 13.85% of the companys outstanding shares.
“The Lululemon Board is pleased that Chip and Advent are partnering in this transaction,” said Michael Casey, Chairman of the Lululemon Board of Directors. “We welcome the opportunity to work with David and Steven, who have significant specialty retail experience and are deeply familiar with Lululemon’s unique culture, having previously served as members of our Board. They will bring valuable expertise and important perspective to Lululemon. Our Board and management team have been consistently focused on enhancing shareholder value and these agreements are important for the company and all of our stakeholders.”
Wilson called Advent 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.
“I am delighted with the addition of David and Steven as new Directors, both of whom are very familiar with our company and bring significant expertise,” Wilson said. “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.”
David Mussafer, a Managing Partner of Advent International and Co-Chairman of the firm’s Executive Committee, said: “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. Lululemon is a business that we know well and we believe has continued growth potential, both domestically and internationally. We look forward to applying our retail expertise and experience with global brands to help Lululemon continue to be an innovation and quality leader as it executes its growth strategy.”
Laurent Potdevin, Lululemon’s CEO Lululemon said he is looking forward to working with the Board of Directors to strengthen the company’s foundation, drive innovation, and accelerate sustainable and controlled global expansion. “By leveraging our design-led roots and providing an exceptional guest experience, we will continue to offer our guests with the high-quality, technical products they know and love as we create value for our shareholders,” Potdevin said..
The stock purchase agreement is subject to expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions and is expected to close in 30-60 days.
The complete agreements between Lululemon, Wilson and Advent will be included as an exhibit to a Current Report on Form 8-K, which will be filed with the Securities and Exchange Commission.
Goldman, Sachs & Co. served as financial advisor to Wilson.
About David M. Mussafer
David M. Mussafer is a Managing Partner of Advent International and Co-Chairman of the firms Executive Committee. He joined Advent in 1990 and has been a principal of the firm since 1993. He currently serves on the Boards of Directors of Charlotte Russe, Five Below, Serta Simmons, and Vantiv. Mr. Mussafer was previously a member of Lululemon’s Board between 2005 and 2010. He also served on the Boards of American Radiology Services, Amscan/Party City, Contact East, Datek Online Holdings, Dollar Express, Dufy AG, Forster Holdings, Hudson News, The Island ECN, Kirklands, Managed Healthcare Associates, O-Cedar, Shoes For Crews, Stone Products, and T-Chem Holdings. Mr. Mussafer received a B.S.M. from Tulane University and an M.B.A. from the Wharton School of the University of Pennsylvania.
About Steven J. Collins
Steven J. Collins is a Managing Director of Advent International. He joined Advent in 1995 and has been a principal of the firm since 2000. He is a Board member of Bojangles, Charlotte Russe, Five Below, and Party City, as well as Kirklands Inc., where he previously served as Chief Financial Officer. Mr. Collins was a member of Lululemon’s Board between 2005 and 2009, and also served on the Boards of Ciraden, Resorts Sports Network, Serta Simmons, and Shoes for Crews. He received a B.S. from the Wharton School of the University of Pennsylvania and an M.B.A. from the Harvard Business School.
About Dennis J. Chip Wilson
Chip Wilson is best known as the founder of the yoga-inspired company Lululemon Athletica, and as a visionary in technical apparel. He founded his first retail apparel company, Westbeach Snowboard Ltd., in 1979. The venture sold apparel targeted at the emerging surf, skate, and snowboard markets. Most recently, Wilson started a new venture with his wife Shannon called Whil; a 60 second meditation designed as a way to temporarily shut down the brain, set personal commitments, and power forward to boost productivity. In addition, Wilson is passionate about numerous philanthropic ventures. With his wife, he established the Chip and Shannon Wilson School of Technical Design at Kwantlen Polytechnic University. The focus of the school is on technical apparel and it is committed to educating students in innovative design for fashion, interiors, graphics, and product. They further founded Imagine1Day, a non-profit organization thats committed to bringing quality education to all Ethiopians funded free of foreign aid by 2030.
About Advent International
Founded in 1984, Advent International is one of the largest and most experienced global private equity investors. Since inception, the firm has invested in more than 290 buyout transactions in 39 countries and today has $32 billion in assets under management. With offices on four continents, Advent has established a globally integrated team of over 170 investment professionals across North America, Europe, Latin America and Asia. The firm focuses on growth and traditional buyout and strategic repositioning transactions across five core sectors, including business and financial services; healthcare; industrial; retail, consumer and leisure; and technology, media and telecom. After 30 years dedicated to international investing, Advent remains committed to partnering with management teams to deliver sustained revenue and earnings growth for its portfolio companies.