Lululemon (NASDAQ:LULU) is seeing an increase to LULU stock on Tuesday after announcing plans to purchase startup Mirror for $500 million.
According to the company, the deal is set to close during the second quarter of 2020. The company is going to use its current liquidity sources, which includes $800 million of cash, its $400 million revolving credit facility and a new $300 million revolving credit facility to fund the deal.
Mirror is an online fitness platform that offers weekly live classes and on-demand workout routines to its subscribers. It was founded in 2018 and has seen strong growth since its launch.
Lululemon’s decision to pick up Mirror makes sense. The company has been looking to expand its own online workout offerings and the two fit well together. Combining forces means that each of them should be able to grow their user bases together.
The Mirror acquisition deal is also a natural expansion of a previous investment from Lululemon in 2019. That saw Lululemon ambassadors offering lessons on the service. This makes sense considering that Mirror founder and CEO Brynn Putnam is a former Lululemon ambassador.
Calvin McDonald, CEO of Lululemon, said this about the acquisition.
“In 2019, we detailed our vision to be the experiential brand that ignites a community of people living the sweatlife through sweat, grow and connect. The acquisition of MIRROR is an exciting opportunity to build upon that vision, enhance our digital and interactive capabilities, and deepen our roots in the sweatlife.”
LULU stock was up 5.2% as of Tuesday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.