JC Penney (NYSE: JCP) may buy a 16.6% stake in Martha Stewart Omnimedia (NYSE: MSO) according to The New York Times. The price would be $3.50 a share, or a 16% premium to where MSO trades now. That would put the price of the transaction at $38.5 million.
The deal would be a marriage of weaklings. Penney has struggles against competitors like Target (NYSE: TGT) and Macy’s (NYSE: M), It has lost most of that competition. JCP recently fired its CEO and brought in the former head of Apple’s (NASDAQ: AAPL) retail division. Macy’s is in such a poor state that there are questions about what one man can do.
MSO has not been able to capitalize on the name of its founder. The company has magazines, TV. and licensing properties. But, none has done well enough to keep the company’s revenue growing, or to produce significant profits. That has cause the share to languish at a price of around $3.
The Times reports
Under a 10-year partnership, J. C. Penney will introduce ministores and a revamped online presence for the Martha Stewart Living brand beginning in February 2013