Oprah Winfrey Takes 10% Stake in Weight Watchers

Oprah Winfrey is coming to the rescue of Weight Watchers international Inc., WTW one zero five.01 % buying a ten% stake and joining the board of the struggling weight-loss company. The news sent Weight Watcher’s battered share price surging.

The 61-year-historic billionaire, who over the years has chronicled her weight considerations on her eponymous speak display and journal, will for the first time turn into a member of Weight Watchers and seem in its promoting.

“I agree with in the software so lots I decided to invest within the business and companion in its evolution,” Ms. Winfrey mentioned in a news unencumber.

Weight Watcher’s stock more than doubled on the information, closing at $13.ninety two in manhattan. Even with that gain, the stock is still down about forty four% to date this yr, as Weight Watchers has struggled with dwindling membership and a $2 billion debt load.

Ms. Winfrey’s endorsement and funding comes at a vital time for the 52-12 months-historical enterprise. profits has fallen for six consecutive quarters. earlier this yr, the company stated it will cut $100 million in fees and extend its efforts to attain the millennial technology, which increasingly turns to apps and other devices that track calories.

Ms. Winfrey is among the many most powerful celebrities for influencing buyers’ buy behavior, in keeping with data from the marketing Arm, an Omnicom group OMC 0.07 % -owned enterprise that ranks celebrity perception in response to on-line polls. Ms. Winfrey ranks No. four out of 3,786 celebrities for have an effect on, in the back of best Kate Middleton, bill Gates and Taylor Swift. “She’s probably the most only a few that drives the needle for brands,” talked about Matt Delzell, managing director of the advertising Arm’s celeb-skill acquisition neighborhood.

Her enchantment is strongest among girls over the age of forty in nonurban markets, pointed out Allen Adamson, a branding knowledgeable and former chairman for North the usa at WPP WPPGY 0.61 % PLC’s Landor pals. “To some extent, what’s most critical is to get the company returned on the radar,” he talked about. “in the event that they can win Oprah’s core following that could be an excellent circumstance, after which tomorrow they could figure out a way to go for more youthful buyers.”

Weight Watchers has lengthy used stars like Sarah Ferguson, the Duchess of York, and singer-actress Jennifer Hudson to advertise the software, however it these days moved far from celebrity advertising to emphasize everyday people and suit selections. advertising initiatives this year covered a “lose 10 kilos on us” plan and an excellent Bowl business prompting viewers to take back manage of their ingesting habits.

The business has also obtained cell and social fitness apps, including Weilos, a social platform which inspires users to share selfies of their weight-loss progress, and Wello, a fitness teaching site. each acquisitions come as Weight Watchers faces competitors from not likely rivals, like under Armour Inc., UA 0.37 % which has tagged $710 million considering 2013 to purchase a few health apps.

On how both aspects got here together, Weight Watchers spokeswoman Stacie Sherer referred to, “We approached her at the start and the conversation grew from there to create a partnership. certainly a deal like this doesn’t come together in a single day. but as soon as we reached a meeting of the minds, the group labored very quickly to get it documented and introduced.”

It is the first time that Ms. Winfrey will serve on the board of a public enterprise, in response to her spokeswoman. The businesswoman additionally runs her deepest company Harpo Inc., which owns 50% of personal: The Oprah Winfrey community, a cable channel in partnership with Discovery Communications Inc., DISCK 0.07 % and publishes her journal with Hearst Corp.

Ms. Winfrey—who also bought inventory alternate options that could raise her 10% stake to 15%—will likely develop into the biggest particular person investor in Weight Watchers. The company is controlled through Artal Luxembourg SA, the investment arm of a european family unit. The fund bought the enterprise from H.J. Heinz KHC -0.seventy six % in 1999, took it public a number of years later and nevertheless held fifty one.5% of the stock as of June 30.

It isn’t the first time Ms. Winfrey has been involved with a weight loss plan or weight-loss brand. In 1988, she confirmed off her 67-pound weight loss by means of treating her viewers to a twirl in her size 10 Calvin Klein denims. She many times outlined her prescription liquid-eating regimen, the Optifast application. That day, a million people tried to phone Optifast, and sales of nonprescription liquid diets soared. but via 1990, Ms. Winfrey had regained a good deal of the weight and denounced liquid diets on the air, hurting the revenue of some liquid-weight-reduction plan items.

Ms. Winfrey is generally credited with sparking a 2nd working participation increase within the U.S. after she ran the 1994 Marine Corps Marathon “over the years she has been requested to companion on a few concepts and has all the time turned down these opportunities in the past,” a spokeswoman for Ms. Winfrey, Nicole Nichols, wrote in an electronic mail.

“What made Weight Watchers distinct is that the mission of the brand is in best alignment together with her own concepts.”

Ms. Nichols talked about there have been no current plans for O journal or her television network to function Weight Watchers, “but that could trade down the highway.” She delivered that Ms. Winfrey joined the burden Watchers software two months in the past and has been the usage of the business’s cell app and dealing with a personal weight-loss educate.

Ms. Winfrey is paying $43 million for 6.four million shares, a cost in accordance with Friday’s closing rate of $6.79, based on a regulatory filing. in addition, Ms. Winfrey bought vested alternatives to purchase an additional three.5 million shares at Friday’s price. Weight Watchers talked about it will ebook a $14 million can charge for the options award.
In accordance with Monday’s gains in Weight Watcher’s inventory, Ms. Winfrey is already sitting on a paper income of about $seventy five million for her shares and alternative award. She has agreed to grasp on to her shares for at the very least two years, in accordance with the filing.