At what price will Stewart pull the trigger on company’s sale?
New York Post, June 18, 2015
Domestic diva Martha Stewart’s reign as owner of an independent publishing, retailing and licensing company could be coming to an end — but analysts say the stock, which jumped 26.3 percent on the takeover talk on Thursday, will probably have to rise higher still to get a deal done.
The company is in talks to sell itself to Sequential Brands Group, a source told The Post. A deal could be announced in the next few days.
Martha Stewart Living Omnimedia stock saw trading halted temporarily on Thursday before resuming to finish the day at $6.44. “This is not a shock,” FBN Securities analyst Rob Routh said about the acquisition talks. But that stock price, which values the company at $370 million, may not be enough to convince the homemaking genius to sell. She controls nearly 90 percent of voting power. “I find it hard to believe a deal could get done at that price,” said Routh. “The company does not have any debt, and they have $57 million in cash on their books,” he said. Because of that, and some beneficial tax loss carry-forwards, “a deal would not make sense unless it was in the $8-to-$9-a-share range,” he said.
Michael Kupinski at Noble Financial also expects a higher price to be forthcoming. “We suspect the value of the company could be as high as $9 a share,” he said, which would put its market cap at $521 million.
A deal with Sequential — which owns companies such as Linens ’n Things and the Franklin Mint, would mean an end to the 18-year-old company as an independent entity.
But don’t expect the 73-year-old to fade away. “Anybody who buys it is going to want to keep her involved,” Routh predicted.
The company last year had already off-loaded its flagship magazine, Martha Stewart Living, as well as the spinoff, Martha Stewart Weddings, to Better Homes and Gardens publisher Meredith Corp. Under that deal, Meredith took over all the back-shop functions and ad sales while Stewart kept control over the actual editorial.
The Wall Street Journal first reported the talks. A spokesperson for publicly traded Sequential Brands — whose shares spiked 12.7 percent on Thursday to $16.08, after touching a 52-week high earlier in the day — declined to comment. A Stewart company spokesperson also declined comment.