Not necessarily known as an acquisitive company, lululemon athletica (LULU -2.71%) has announced a fresh new asset buy. On Monday, the athleisure wear king announced that it has signed a definitive agreement to purchase MIRROR, a privately held company fitness company. The price is $500 million.
MIRROR's core product is a fitness device that is essentially a reflective video screen. This allows users to join live and on-demand fitness classes conducted online, with their instructor appearing on the screen in addition to their own reflected image (in order to check their form). A monthly subscription fee grants access to the classes.
As MIRROR is a privately held business, it does not publish its financial results. Without elaborating, Lululemon did say that it "has seen rapid growth and strong engagement" since its 2018 debut.
The acquisition is an attempt to broaden Lululemon's business; the company remains essentially an athleisurewear apparel retailer.
The two companies are not a complete strangers to each other. Lululemon made an initial investment in the company last year as part of a financing round, and the two businesses subsequently signed a content partnership agreement.
Lululemon said it expects to fund the acquisition from its own liquidity sources. These include more than $800 million in cash, and around $700 million in debt financing available from a pair of revolving credit facilities. The deal is anticipated to close in Lululemon's Q2; after it MIRROR will continue with present leadership to operate as a stand-alone entity.
Investors seemed to be pleased with the acquisition. On Monday, shares of Lululemon rose broadly in line with both the wider stock market and other discretionary consumer goods titles.