J.C. Penney and Martha Stewart Living Omnimedia announced that the retailer has bought a 16.6% stake in the media and lifestyle company for $38.5 million.
The two companies have also reached a 10-year commercial agreement that will put Martha Stewart stores inside Penney locations. They will also set up an e-commerce site that is expected to launch in 2013. MSLO is expected to receive more than $200 million from Penney over the deal's initial lifespan.
"To partner with J. C. Penney, Ron [Johnson, CEO of Penney] and his extraordinary team is a big and important step in realizing my dream of putting our Martha Stewart designed products within easy reach of an even broader consumer audience," said Martha Stewart in a statement. "I'm also very excited to work with J. C. Penney to create an online shopping experience, which will offer a broad range of Martha Stewart products. I cannot wait to get started on this new venture."
"The strategic alliance we've announced today with J. C. Penney strengthens our balance sheet, will enhance the reach of our brands and expand our vibrant merchandising and media presence for the benefit of all of our partners," added Lisa Gersh, president and COO of MSLO. "We believe this alliance is an important step in positioning our company for the future. J. C. Penney also recognizes the powerful cross-promotional value and reach this alliance represents in light of our magazine, digital and broadcast properties. We are excited to work closely with the J. C. Penney team to help drive the success of our respective businesses."
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