Oprah buys 10% of Weight Watchers, stock soars
Oprah Winfrey has helped to significantly fatten up Weight Watchers International's market value.
The diet company's stock -- which had been slumping for the last few years -- soared after the firm announced on Monday that Winfrey would take a 10% stake. The billionaire media mogul, who will also receive options to acquire an additional 5% stake, is joining the Weight Watchers board as well.
Weight Watchers (WTW) concurrently announced an expansion of its brand beyond a pure focus on weight loss to a general emphasis on healthier, happier living.
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Investors sent the stock up 105% to close at $13.92 on Monday. The company's stock had lost nearly 73% of its value in 2015, prior to the news of Winfrey's investment being publicized.
"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," Winfrey said in a statement. "I believe in the program so much I decided to invest in the company and partner in its evolution."
Winfrey bought her shares at $6.79 apiece for a total investment of $43.2 million, according to a Securities and Exchange Commission filing.
Analysts expect Winfrey to use the considerable influence of her brand and media presence — including her well-known knack for promoting health-related initiatives — to drive interest in Weight Watchers meetings and products.
The TV host, actor, producer and publisher "will not just bring attention to the stock, but will accelerate sales and profit recoveries" as Weight Watchers benefits from "free publicity and media savvy," S&P Capital IQ analyst Efraim Levy said in a research note.
In addition to her role as a board member, Winfrey, who has long shown an interest in health issues and dieting programs, will serve as an adviser to the company.
"Through our conversations, it became clear that there is tremendous alignment between Oprah's intention and our mission," Weight Watchers CEO Jim Chambers said in a statement. "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."
A spokesperson said Chambers was not available for an interview.
Nicole Nichols, a spokeswoman for the Oprah Winfrey Network (OWN), said in an email: "There are no current plans to promote through OWN or O Magazine, but that could change down the road."
Weight Watchers has struggled to keep up as dieting tools have increasingly gone high tech. Its total revenue fell 19% from $1.84 billion in 2011 to $1.48 billion in 2014. That included declines in meeting revenue, product sales and licensing fees.
About 800,000 members attended Weight Watchers meetings in 2014, down 38% from 1.3 million members in 2011. The number of Weight Watchers meetings has fallen about 20% from 45,000 to 36,000 during that period.
Those meeting declines come as an increasing number of dieters count calories with smartphone apps and monitor their physical activity with high-tech devices. The company, which offers digital tools for users, has also invested in new services such as one-on-one health advice delivered advice through email, text-messaging and phone calls. In addition, it created personalized online accounts that sync with activity-tracking devices such as FitBit.
About 1.5 million people subscribe to the company's online products.
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As for Winfrey's deal, it includes the option to buy an additional 5% of the company for $6.97 per share. She can't sell any Weight Watchers stock for the first two years, according to deal terms filed with the SEC. She can sell up to 15% in the third year of her investment, up to 30% in the fourth year and up to 60% in the fifth year.
In five years she would have the right to sell all of her shares.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
