Comparison Of Under Armour And Lululemon Athletica

As you requested, I have researched and weighed the advantages and disadvantages of the potential merger of our company with Lululemon Athletica for the upcoming fiscal year. For the purpose of providing assurance to our Board of Directors on this business plan, intensive efforts were made to thoroughly understand the current standpoint of both companies, in regards to both financial and corporate cultural bases. If Under Armour acquires Lululemon, they will gain a larger female target audience that Under Armour was once lacking, and therefore be able to gain more market share in the athletic apparel industry as well, fending against competitors like Nike or Adidas. The collaboration between two companies will also provide for cultural synergy

Athletic apparel is currently making up 17% of the overall apparel industry, making over 35 billion in revenues, and so the merger would gain higher market power in comparison to its competitors, like Nike and Adidas (Walsh, 2015). Lululemon currently is holding at $61.35, which is substantially lower than its results in the past few years. Under Armour on the other hand, is holding at $78.04 per share, but its overall cash value is lower than that of Lululemon Athletica, making the merger a perfect way to achieve the best of both worlds (Walsh, 2015). They will also be able to reach out to a broader target audience by joining alliances and providing services to both the male and female population. Lululemon will provide Under Armour with a 50% increase in female customers, which is exactly what Under Armour needs right now to access the female athletic wear market, since this is an area in which they have been lacking for a while (dbmaltby, 2013). The recent trend of the Under Armour ‘womanifesto” is a perfect example of the company’s efforts to gain more female approval, even targeting Lululemon’s loyal custromers. From the benefits proven above, it is only ideal at this time for the two companies to merge into one to gain access to the market and its new customer