Martha Stewart Living Omnimedia to Be Acquired for About $350 Million

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The lifestyle media company has struggled in recent years, with a turnaround specialist CEO focusing on making it profitable over the past year and a half.

Martha Stewart Living Omnimedia has agreed to be acquired by retail licensing company Sequential Brands Group for about $353 million.

Sequential said Monday it has struck a definitive agreement to buy the company for $6.15 per share in cash and stock, a premium of about 21 percent to the stock's closing price on Wednesday, a day before first reports of a possible deal. At its height in 1999, the domestic doyenne's company had a market value of about $2 billion.

Martha Stewart shares fell sharply after news of the deal. As of 10 a.m. ET, they were down 14.2 percent at $5.99 after closing Friday's trading session at $6.98, well above the takeover price. The stock also hit a 52-week high of $7.11 on Friday. 

The deal includes a 30-day "go-shop" period for Martha Stewart Living Omnimedia that allows the company to explore possible alternative deals. An independent committee of its board negotiated the Sequential deal on the company's behalf and recommended it to the board.

Founder Martha Stewart, 73, took her brand of homemaking to the masses and launched the lifestyle media company in 1997, taking it public in 1999. The company was known for its merchandising business, but also for TV shows and magazines.

Under CEO Daniel Dienst, a turnaround expert with experience mostly in the metals industry, the company has over the past year and a half focused on becoming profitable again and developing its retail opportunities.

Stewart has been serving as non-executive chair and chief creative officer. Under the terms of the agreement, which has been approved by the boards of both companies, Stewart will continue to be "an integral part of the brand she founded" with a renewed long-term commitment to serve as chief creative officer, the companies said. Stewart will also become a " significant stockholder" of the new company and will be nominated to serve on its board of directors, Sequential said.

Sequential Brands has acquired some well-known brands in recent years. Earlier this year, it struck a deal to buy a 50 percent stake in Jessica Simpson’s brand. It also owns Justin Timberlake’s William Rast brand.

The deal "adds a new vertical to Sequential's platform, which is expected to generate nearly $3.75 billion in annual global retail sales from a combined portfolio of consumer brands in the home, fashion, lifestyle & active categories," Sequential said.

"This is a transformational merger for Martha Stewart Living Omnimedia, the company I founded in 1997," said Stewart, adding it was designed "to further the growth and expansion of the unique Martha home and lifestyle brand."

She referenced a previous deal that put magazine publisher Meredith in charge of the company's media operations. "With our media business operations now successfully transitioned to Meredith, we now have the opportunity to tap into Sequential's expertise and resources to expand our merchandising business both domestically and abroad," said Stewart. "The Sequential team is smart, hardworking and understands the power and limitless opportunity of the Martha Stewart brand and its formidable design, editorial and marketing teams."

Yehuda Shmidman, CEO of Sequential, said: "Martha Stewart's impact around the world is staggering, and the empire she founded is unmatched in its industry. In fact, research shows that the Martha Stewart brand has 96 percent awareness among women in the U.S., and 7 out of 10 women say that Martha has and does influence the way they think about, organize and manage their homes."

He added: "Looking ahead, we believe that we can leverage our global activation platform at Sequential in partnership with Martha and her team to develop the next chapter of growth for the Martha Stewart brand. We are honored to have this opportunity and thrilled to be working together with Martha Stewart."

The deal is expected to close in the second half.

Twitter: @georgszalai