Oprah Winfrey to Buy Stake in Weight Watchers (WTW)

Shares of Weight Watchers International, Inc. (WTW) were trading up +6.26 or +92.19 percent to $13.05 per share in this morning’s premarket after news broke early this morning that Oprah Winfrey was buying a stake in the company. Weight Watchers stock closed at $6.79, down -0.11 or -1.59 percent in Friday’s regular trading session.

Founded in 1963 by a Brooklyn, New York homemaker, Jean Nidetch, New York City based Weight Watchers International is a transnational company and the world’s largest provider of commercial weight management services.
The company operates in 30 countries through both company owned and franchises and holds over 36,000 meetings each week. In addition to providing members with weight management assistance through its meetings and website, the company produces and sells a wide range of products, programs and publications on weight loss.

Earlier this morning, Weight Watchers announced their partnership with Oprah Winfrey, in which the media personality is to purchase a 10 percent stake for approximately $43.2 million and join the board of directors of the company. The transaction will have Winfrey purchase newly issued shares representing 10 percent of the company’s shares outstanding and receive stock options to buy an additional five percent of shares outstanding.

According to Weight Watchers press release, Winfrey will assume three roles at the company: she has joined the program as a member and will share her perspective and experiences as she participates. As a board member and advisor, Winfrey will help the company develop strategies and offer her insight into developing and executing the program to inspire people to live a healthier and inspired lifestyle. And as an owner she will assume a 10 percent ownership of the company through the purchase of 6.4 million shares with an option to purchase an additional 5 percent.

Oprah Winfrey noted in the press release that, “Weight Watchers has given me the tools to begin to make the lasting shift that I and so many of us who are struggling with weight have longed for. I believe in the program so much I decided to invest in the company and partner in its evolution.”

Jim Chambers, President and Chief Executive Officer of Weight Watchers stated that, “We are expanding our purpose from focusing on weight loss alone to more broadly helping people lead a healthier, happier life. Through our conversations, it became clear that there is tremendous alignment between Oprah's intention and our mission. We believe that her remarkable ability to connect and inspire people to realize their full potential is uniquely complementary to our powerful community, extraordinary coaches and proven approach.”

According to the five year agreement, Winfrey has given Weight Watchers the right to use her name, likeness and image for company endorsements, its services, programs and products subject to her approval. Winfrey will also have the right to use Weight Watcher marks to promote the company. After the five year term, the agreement will have successive one year renewal terms.

Weight Watchers has been under pressure to gain back customers due to changes in lifestyle in the younger generation. People are eating more nutritious food and exercising regularly, which makes weight loss and weight loss programs redundant. Winfrey could breathe new life into the company with her media empire and role as a member. The market is certainly reacting favorably, with Weight Watchers stock trading at almost double its closing price on Friday.

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Published on Oct 19, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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