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London - Oprah Winfrey and Weight Watchers International Inc are teaming up in an attempt to transform the dieting company into a broader health and fitness brand, sending the company's shares up almost 90%.
Talk-show host and media magnate Winfrey will join Weight Watchers' board and take a 10% stake in the company, with options to buy more, the two parties said on Monday.
Shares of Weight Watchers nearly doubled in early trading, cutting some of their recent losses to hit their highest level since February. More than 35 million shares changed hands on US exchanges, the busiest day in the company's history.
Winfrey will help broaden Weight Watchers' reach and appeal and the company plans to feature her in its marketing, Chief Executive Jim Chambers said in an email to Reuters.
The media star, who for years has struggled publicly with her weight, will receive options to buy another 5% of the company.
Besides being a board member and an adviser, she has also joined the weight-loss program and will document her experience.
"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.
Winfrey, aged 61, was regarded as America's most influential celebrity for many years thanks to her daily talk show, magazine, book club and production company Harpo.
Although her influence has slipped since she ended 'The Oprah Winfrey Show' in 2011 after 25 years to launch the Oprah Winfrey Network (OWN) on cable TV, Winfrey remains one of the richest and most powerful celebrities in the United States.
Forbes magazine has estimated her net worth at $3bn.
"The good thing about picking Oprah Winfrey is that although she is very much a really strong media personality, lots of people still see her as being a very ordinary person, a person that has struggled with things like weight loss," said Neil Saunders, CEO of retail research firm Conlumino.
Stock soars
Consumers' embrace of calorie-counting apps on mobile phones, and the popularity of wearable fitness trackers such as those made by Fitbit Inc, have made it hard for the Weight Watchers brand to stand out, analysts have said.
Active online subscribers have dwindled to 2.8 million from a four-year high of 3.6 million in March last year.
"The severity of recent recruitment struggles implies more fundamental issues at hand, namely a platform lacking innovation, technology, and personalisation," Morningstar analysts said in an August 10 research note.
Winfrey will buy nearly 6.4 million shares at Friday's closing price of $6.79 per share for $43.2 million. She will also have options to acquire an additional 5% stake.
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 June 30.
The stock was last up $6.05, or 88%, to $12.81 in morning trading on the New York Stock Exchange.
Coming into Monday's trading, the stock had lost 92% of its value since a closing peak of $85.76 in May 2011, and for several years attracted a steady flow of short sellers, betting the stock would fall further.
Weight Watchers currently has short interest of about 11.65% of shares outstanding, according to Markit, a relatively high amount.
That means investors who were betting against the shares might today be in a position where they are forced to buy back the stock.
