dbmaltby

Daily thoughts, observations, and speculations

Mergers & Acquisitions at Under Armour

UA has not had any mergers or acquisitions. They are a niche company that is not large enough to buy other companies. However, I can talk theoretically about an acquisition I would like to see them perform in order to grow their customer base.

I would like to see UA acquire Lululemon. Under Armour has been traditionally a men’s sportswear firm. However, in the past couple years they have tried to grow their female market.  Lululemon concentrates on women’s fitness and is a rapidly growing athletic apparel retailer with a brand that women love. This would give UA a strategic advantage over Nike and Adidas, their main competitors.

Furthermore, Lululemon is a niche company, just like Under Armour. It makes a lot of sense for UA because it will fill its women’s category. Lululemon will instantly give UA 50% more access to a customer base. Herein there are synergies between the two companies. An acquisition occurs when one firm buys a controlling interest in another firm with intent of making the acquired firm a subsidiary business. This is exactly what UA should do with Lululemon.

This acquisition will help UA “keep up” with its competitors. UA has very smart managers and executives. Lululemon recently made the news for some serious blunders with its leadership and design team when they released yoga pants that were a little to shear for the comfort of most women. UA will bring a level of managerial hubris to Lululemon and more effectively bring the genius innovation of Lululemon to market.

UA wants to grow, and they have focused most of their efforts on growing globally and winning over the female athlete customer. Unfortunately, UA does not have the economies of scale to catch up with their large competitors. So they must acquire another company to boost their efforts. Lululemon will help them do just that.

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This entry was posted on April 27, 2013 by .
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