What: Shares of Weight Watchers International (WW 8.11%) were up just under 18% as of 1:10 p.m. Monday after the New York Post reported the company is a takeover target for at least one hedge fund.
So what: Citing "three sources familiar with the situation," the New York Post notes Weight Watchers' 86% plunge over the past year has spurred one activist hedge fund to talk with potential partners about making Invus Group's Artal Group -- the company's majority shareholder with a 51% stake -- an offer. The hedge fund has also purchased the majority of Weight Watchers' remaining $144 million in senior loans due next April, the publication reported.
Now what: NYP's sources say including debt the offer could be around double yesterday's closing price around $4.09 per share. But the fact that Weight Watchers had jumped "only" 18% by the afternoon on the potentially massive offer underscores the challenges the unnamed hedge fund could have making a deal happen. To be sure, NYP notes Weight Watchers has been a massively profitable investment for Artal Group since it paid $224 million for the company in 1999. According to a Forbes report in 2012, over the next 13 years Artal collected $3.8 billion in cash from Weight Watchers and its debt.
In the end, I feel the need to reiterate that such takeovers are hardly guaranteed. So given the risk of any deal falling through in these early stages, I think Weight Watchers investors would be wise to take at least some of today's quick gains off the table while they still can.
