16 Percent Stake In MSLO
Property: 16 Percent Stake In MSLO
Buyer: J.C. Penney
Seller: Martha Stewart Living Omnimedia
Date: December 2011
Price: $38.5 Million
After initiating a search for investors and potential partners with Blackstone Advisory Partners in May 2011, Martha Stewart Living Omnimedia announced that retailer J.C. Penney invested $38.5 million in the multi-brand company, and will hold a 16.6 percent stake. This equated to 11 million new shares of Class A common stock, priced at $3.50 a share.
In February 2013, Martha Stewart retail outlets will be erected in the majority of JCPenney department stores. Retail items will be sourced and marketed by J.C. Penney. A MSLO e-commerce site will also launch in 2013, and will include J.C. Penney merchandise, in addition to other items selected by Martha Stewart staff.
The partnership signalled the importance e-commerce was taking on at the time with publishers. Partnerships were springing up all over the place between consumer publishers and commerce/retail outlets.
â€śOne of the things we said at the time [of the Blackstone announcement], and I said very clearly, was we were reaching out to Blackstone to explore strategic partnerships. I believe that much of the press was written that we were selling the company. I was very consistent for the past six months that we were exploring strategic partnerships,â€ť Lisa Gersh, MSLO president and COO, told Folio: when the partnership was announced. â€śThis is the partnership that has resulted from this exploration, and we now consider the Blackstone process to be complete.â€ť
As a result of this partnership, MSLO is expecting to receive over $200 million from J.C. Penney over the contractual 10-year period. The retailer will also have a spot on Martha Stewart Living Omnimediaâ€™s board of directors.
This announcement marked yet another partnership between the retailer and a major media brand. Earlier in the year, J.C. Penney and Hearstâ€™s Esquire teamed up to develop CLAD, an e-commerce site curated by Esquire staff and CLADâ€™s buying team. According to the CLAD website, â€śJ.C. Penney is an investor in CLAD, not an owner. CLAD will debut under J.C.Penneyâ€™s newly formed Growth Brands Division, a business unit created to pursue high potential opportunities.â€ť However, that partnership quickly dissolved when JCP pulled out a few months later to focus on other branding efforts.
Of the MSLO partnership, Gersh said, â€śIâ€™m glad we did it, and Iâ€™m sorry it got taken for the fact that the company was for sale, because we sure spent a lot of time answering that question. And now the questionâ€™s answered.â€ť
2011 was a year during which publishers moved aggressively into e-commerce. This deal took it one step further, while also squashing buyout rumors.