Lululemon founder Dennis Wilson to sell half his company stake

Canadian yoga apparel maker Lululemon announced on Thursday that its founder Dennis 'Chip' Wilson has agreed to sell approximately half of his 27.7 percent stake in the company to private equity firm Advent International for roughly 845 million dollars. Wilson has also agreed not to launch a proxy fight or a hostile takeover

of the company.

As part of the agreement, Lululemon's board will be expanded to twelve members from the current ten members, with the addition of two senior managers of Advent. Following the announcement, Lululemon shares gained more than 6 percent in extended trades.

Founder of Lululemon sells half of his stake to Advent

Wilson currently beneficially owns 40.2 million shares of Lululemon common stock, representing about 27.7 percent of the company's outstanding shares. On completion of the stock sale agreement, Advent and Wilson will each beneficially own approximately 20.1 million shares of Lululemon common stock, or about 13.85 percent of the company's outstanding shares.

Advent had previously invested in Lululemon in 2005 and worked closely with Wilson as well as five of the company's ten current board members, including Chairman Michael Casey, to help the company's expansion. 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 Mussafer and managing director, Steven Collins will be appointed to Lululemon's board of directors, effective as of the closing of the stock sale transaction.

In addition, Mussafer will be appointed co-chairman of the Lululemon board, serving alongside chairman Casey, and will also serve on the board's nominating and corporate governance committee. Collins will serve on the Lululemon board's compensation committee. Mussafer previously served as a director on Lululemon's board from 2005 to 2010, while Collins served as a director from 2005 to 2009.

Lululemon noted that with this agreement, the company, Wilson and Advent have affirmed their commitment to ensuring best practice corporate governance. Wilson and Advent have also agreed to certain standstill provisions for the company's 2015 and 2016 annual stockholder meetings, which will prevent them from waging a proxy fight.

Lululemon made headlines last year when customers complained that some of their black yoga pants were too sheer. The recall of these products cost the company millions of dollars and dented its image. Wilson, who founded Lululemon in 1998, was said to be looking to shake up the company's board and gain more influence over its operations.

The yoga apparel firm closed Thursday's regular trading session at 39.03 dollars, down 0.94 cents or 2.35 percent on a volume of 2.8 million shares. However, in after-hours, the stock gained 2.37 dollars or 6.07 percent to 41.40 dollars. (DPA)