Lululemon (LULU) Founder to Sell Entire Stake in the Company
Shares of Lululemon Athletica Inc. (LULU) were trading off -1.92 or -2.88 percent to $64.85 in Thursday's premarket after news that the company's founder Dennis "Chip Wilson filed to sell his entire stake in the company. Lululemon Athletica stock closed at $66.77, down -1.50 or -2.20 percent in Wednesday's regular trading session.
Founded in 1998 by Chip Wilson Vancouver, British Colombia based Lululemon Athletica Inc. describes itself as a yoga inspired athletic clothing and apparel company.
Earlier this morning, Wilson filed a 424B3 form with the Securities and Exchange Commission to sell his entire stake of 20,109,131 shares of Lululemon common shares at a maximum price of $60.95 per share, which represents a proposed maximum aggregate offering price of over $1.2 billion. The Wilson stake, which represents 14.22 percent of the company's outstanding shares, included a 10.2 million share block owned by LIPO Investments, a company controlled by Wilson.
Wilson has been at odds with the board of Lululemon since the company's annual meeting last June. At the time, Wilson voted his entire 28 percent stake in the company to prevent the reelection of board members. Wilson wound up selling half of his stake in the company to Advent International for $845 million or about $42 per share. Advent got two director seats on the board of the company after the sale.
Today's filing with the SEC marks the settlement of a dispute between Wilson and the Lululemon board of directors. Wilson expressed he was unhappy with the direction the company had taken after he left as chairman. As part of the deal with the board, Wilson agreed not to pursue any buyout of the company for at least a year.
Lululemon's board differences with Wilson were exacerbated after his wife and son founded another new clothing chain, Kit and Ace. The new chain does not sell yoga clothing but clothes with a similar look. Lululemon's board had a problem with Wilson advising his wife on the new chain.
The company recently reported it had missed analyst expectations on quarterly earnings, but revenue beat estimates with total comps exceeding six percent versus five percent expected. Lululemon stock has gained more than 20 percent so far this year, reaching a high of $70 per share in April. Despite the amount of stock being sold, the stock has been resilient, declining -2.5 percent in this morning's premarket after having dropped more than four percent earlier.
Other News About LULU
Lululemon founder's share stake sale is 'very good news'--Sterne Agee
Analyst Sam Poser said the 20.1 million share sale by Wilson "represents a buying opportunity .
Has Lululemon Athletica inc. Recovered From Past Embarrassments?
After Wilson's offensive comments following the yoga pants recall, the company appears to have turned a corner with an impressive quarterly earnings report.
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