The former talkshow host, head of a media empire, could net as much as $50m profit from initial share price spike on news she had bought 10% of company
Winfrey announced on Monday morning that she had agreed to purchase a 10% stake in Weight Watchers International and had signed a collaboration deal to promote the diet company and its services. The announcement has caused shares of Weight Watchers to soar. With the stock changing hands for around $18, Winfrey has single-handedly generated $700 million in stock market value in two days, given that the company has 63.6 million shares outstanding following the Winfrey deal.
Shares of Weight Watchers are up about 170% since they opened for trading on the New York Stock Exchange on Monday morning. Weight Watchers’ stock doubled in value on Monday and rose by another 30% or so on Tuesday.
The big winner is Winfrey herself. Her 10% stake in Weight Watchers is now worth some $110 million. Her two day paper profit? Also about $110 million. That’s right. In addition to the 10% stake Winfrey bought on Tuesday for $43.2 million, the company also awarded Winfrey an option to purchase 3.5 million shares for $6.79 each, which was the price the stock closed at on Friday afternoon. Winfrey will now have to make sure Weight Watchers meets the high expectations that investors are placing on it. She can’t sell any of her Weight Watchers stock for two years and can’t unload the entire position for five years.
The other big winner here this week is Ray Debbane, the chairman of Weight Watchers who has controlled the company since 1999. Debbane’s New York money management firm, Invus, controls a majority of Weight Watchers’ stock through its Artal Group. Invus has already collected nearly $4 billion in cash from its Weight Watchers investment through the years. But Invus’ stake in Weight Watchers had diminished in value in recent years. Invus’ stake in Weight Watchers, however, has increased in value by about $340 million in the last two days.