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Lululemon Athletica founder Chip Wilson arrives for the annual meeting in Vancouver on June 11, 2014.BEN NELMS/Reuters

After a months-long battle, Lululemon Athletica Inc. founder Chip Wilson has reached an agreement with the yoga wear retailer's board of directors that will see him team up with a private equity firm to get more sway over the board.

The deal, announced late Thursday to resolve the spat that surfaced in June, requires Mr. Wilson and U.S.-based Advent International to refrain from waging a proxy fight in the next two years or so.

It also entails Mr. Wilson selling half of his almost 28-per-cent stake in Lululemon to Advent for $845-million (U.S.). And it gives Advent two seats on the board. The Boston-based firm was a minority investor in Vancouver-based Lululemon in 2005 when the chain was gearing up for a big international expansion.

As part of the agreement, the board will expand to 12 members from 10, and both new directors will be appointed by Advent, with one of them becoming co-chairman.

Mr. Wilson is already a board member and he will have the right to nominate his replacement if he steps down.

"He's selling the stock at a fairly low price because he saw this as the best way to be able to re-focus the board without getting into a proxy war which would have hurt Lululemon," a source familiar with the situation said.

The deal, which is to close within 60 days, comes after months of friction between Mr. Wilson and the board which threatened to derail the retailer's recovery efforts at a critical time in Lululemon's aggressive expansion.

At the annual meeting in June, Mr. Wilson tried unsuccessfully to remove two members from the board, including the chairman who had recently replaced him in that position. More than anything, it was his way of expressing his frustration with the board which he had accused of sacrificing product quality for short-term results, hurting the company's prospects.

The dispute came in the wake of Lululemon being forced last year to pull its signature black pants for being too sheer. Now under new leaders, Lululemon is feeling the heat to fix its problems quickly and shore up its expansion efforts beyond North America, all as it faces mounting competition.

"It certainly sounds as though the founder has declared he's not going away," said Jim Danahy, CEO of consultancy CustomerLAB and program director of the centre of excellence in retail leadership at York University's Schulich School of Business.

"It sounds like constructive engagement. If the fur is going to fly it's going to be contained to the boardroom."

Mr. Wilson hired bankers at Goldman Sachs Group Inc. two months ago to consider a host of options, including partnering with a private equity firm to take Lululemon private, sources have said.

The current agreement "might be the best of all worlds," Mr. Danahy said. It should allow Lululemon's new CEO, Laurent Potdevin, "to sink or swim."

As a way to ensure peace, the agreement requires Mr. Wilson and Advent to stay away from conducting or supporting a hostile takeover bid until the day after Lululemon's 2016 annual meeting, a source said. And until that day, Mr. Wilson, Advent and the company cannot "make any disparaging statement ... regarding any other party," the source said.

Mr. Wilson has come under fire for some of his public statements, including late last year when he seemed to suggest that large women were not a good fit for Lululemon's clothing.

The deal calls for an independent expert to evaluate the board's policies and procedures in the 90 days following the Advent stock purchase.

"Advent is a strong partner that knows Lululemon and our culture and will be an incredibly helpful addition to the board as we build an even stronger company," Mr. Wilson said in a joint statement with the company.

Under the agreement, Advent will name its officials, Steven Collins and David Mussafer, to the board, and the latter will be appointed co-chairman alongside current chairman Michael Casey.

Mr. Wilson now owns 40.2 million shares of Lululemon stock, representing 27.7 per cent of the company's shares. Its stock has tumbled more than 30 per cent in the past year.

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