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Oprah Winfrey takes stake in Weight Watchers Oprah Winfrey takes stake in Weight Watchers
(about 2 hours later)
Oprah Winfrey is buying a 10% stake in the company behind the Weight Watchers slimming business for $43m (£28m) as it seeks to branch out into health and wellness. Oprah Winfrey is a fan of Weight Watchers, so much so that she has bought 10% of the company.
Winfrey will take a place on the board of Weight Watchers International in what the company described as a long-term partnership. “I believe in the program so much I decided to invest in the company and partner in its evolution,” the talk show host turned-billionaire businesswoman said on Monday as she announced the deal, which includes personal endorsements and a seat for her on the company’s board.
The former US talkshow host turned media proprietor will also take part in the Weight Watchers programme and “candidly share her experiences and perspective along the way”, it added. Investors appeared to have faith in Winfrey, who has been dubbed “queen of all media” and built up a $3bn (£1.9bn) business empire. Shares in the Weight Watchers surged 84% after the news broke. The share price spike – from the $6.79 she paid on Friday night to as high as $12.50 on Monday morning – has made Winfrey a paper profit of $32.5m.
Winfrey will also advise the company on programme development and future products. “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,” she said in a statement.
Under the agreement, she will purchase newly issued shares representing a 10% stake in the company and receive options to acquire an additional 5% of the fully diluted shares. Winfrey has long shared her battle with weight loss with her millions of fans, and once wheeled a red wagon filled with 67lbs of fat on to her talk show to illustrate just how much weight she had lost.
Shares in the weight management company jumped 37% to $9.30 in pre-market trading on Monday. “With all the other things that I know how to do and all the other things that I’m so great at and all the other accomplishments, I can’t believe I’m still talking about weight,” she said In an interview for her magazine, O, five years ago. “For me it is not a cosmetic issue. It is an emotional issue. When my engine runs down, my drug of choice is food.”
Winfrey will buy nearly 6.4m shares at Friday’s closing price of $6.79 a share for $43.2m, according to Weight Watchers. Weight Watchers, founded by Jean Nidetch in her Brooklyn kitchen 52 years ago, has struggled to maintain its relevance as the weight loss market has dramatically shifted to weight tracking apps and online services, most of which are free. Weight Watchers subscriptions start at $20 a month, and membership has been falling fast.
If Winfrey buys 15% of Weight Watchers, she will become the second largest shareholder after investment firm Invus Public Equities Advisors LLC, which owned a 51.5% stake as of 30 June. Jim Chambers, Weight Watchers chief executive, said: “Through our conversations, it became clear that there is a 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.”
Winfrey has often spoken about her struggle with her weight and a thyroid problem that had led her to weigh 90kg (200lb) in 2008. Winfrey has the option to buy a further 5% of the company, but she is prevented from selling any shares for two years to show that she has faith in the long term prospects for the company.
She is one of the most popular talkshow hosts in history and one of the US’s most high-profile philanthropists and civil rights campaigners, backing Barack Obama’s campaign for the US presidency.
Winfrey runs the cable network OWN, which she created in a joint venture with Discovery Communications.
Weight Watchers, founded in 1963, provides online subscriptions for weight management and coaching. It has seen its subscriber base dwindle in the face of free mobile apps for weight management and fitness bands such as those made by Fitbit.
The company will expand its business from focusing on weight loss to help people lead healthier lives, its chief executive, Jim Chambers, said in a statement on Monday.
Up to Friday’s close, Weight Watchers shares had tumbled 72.6% this year.