Sequential Brands Group To Double 3-Year Outlook With Martha Stewart's Help

Sequential Brands Group Inc (NASDAQ: SQBG) will see its dreams come true for $100 million in annual revenue through its pending acquisition of Martha Stewart Living Omnimedia, Inc. (NYSE: MSO), an analyst said Monday.

Wunderlich Reiteration

Wunderlich's Eric Beder reaffirmed his Buy rating and $18 target on Sequential Brands after the company agreed to acquire Martha Stewart for $6.15 a share in cash and stock.

Last year, Sequential posted revenue of $41.8 million from brands including Linens N Things, the Franklin Mint and And 1.

Sequential traded recently at $16.92, down $0.08, although the shares are up nearly 30 percent year-to-date.

Beder said he'll boost his target on Sequential after completion of the Stewart deal, which he said will position the company as "the leading growth player in the licensing industry."

Related Link: Mid-Day Market Update: Martha Stewart Living Omnimedia Drops

Acquisition History

Sequential will add between $0.25 and $0.40 a share to its earnings with the acquisition, according to Beder, who expects the company will soon double its three-year earnings outlook.

The deal's total value to Stewart shareholders would be just under $200 million for Stewart's 32.4 million shares outstanding.

Stewart shareholders are to get half the consideration in cash and half in shares, with the cash portion financed with funds from an affiliate of Blackstone Group.

Sequential last year paid $260.3 million to acquire Galaxy Brand Holdings Inc. including a cash component reported at $100 million.

Galaxy's acquisition was financed by Sequential with a term loan of up to $75 million and a revolving credit facility of up to $25 million.

Beder reportedly said at the time that the Galaxy deal "firmly establishes the company as a major player in the brand licensing sector."

Image Credit: "Martha Stewart 2011 Shankbone" by David Shankbone - Own work. Licensed under CC BY 3.0 via Wikimedia Commons