Monday January 28

Slimmed down Jenny Craig to go private for $115 mln

NEW YORK, Jan 28 (Reuters) - Popular weight loss firm Jenny Craig Inc. (OTC BB:JCGI.OB - news) said on Monday it agreed to sell itself for about $115 million in cash to an investor group led by ACI Capital Co. Inc., after struggling to overcome slimmed-down profits and sinking sales.

Under the terms of the deal, Jenny Craig stockholders will receive $5.30 in cash for each share they own, and the company will be taken private. This is a 68 percent premium to Jenny Craig's $3.15 closing price on Jan 25.

Shares of La Jolla, Calif.-based Jenny Craig soared on Monday, touching a 52-week high and closing up 62 percent at $5.12 per share.

The deal comes as the company, which at one time had former White House intern Monica Lewinsky as its spokeswoman, ends years of belt-tightening and even a delisting from the New York Stock Exchange last summer.

``Our stock has been languishing for some time so we wanted to increase shareholder value,'' said Jim Kelly, chief financial officer of Jenny Craig. ``We hired advisors to explore all kinds of alternatives ... this is what we thought was the best thing right now.''

DB Capital Partners, the private equity arm of Deutsche Bank (NYSEB - news), is ACI Capital's partner in the deal. The acquiring investor group includes company founders Sid and Jenny Craig who started the chain in 1983.

While the merger agreement prohibits Jenny Craig from soliciting competing bids, it has 60 days to accept a superior proposal, subject to payment of a breakup fee of $4.875 million.

Kent Kreh, former chief executive of rival and diet industry heavyweight Weight Watchers International (NYSE:WTW - news), will join the company as chairman. The current management team will run the company. Jenny and Sid Craig, who owned about 67 percent of the company, will remain involved with the company and Sid Craig, currently chairman and CEO, will serve on the board.

Also joining the Board will be Matthew Bronfman, a managing director of ACI Capital, and Richard Wenz, a consulting partner of DB Capital.

Completion of the deal, which is expected in the second quarter, is subject to stockholder approval, the securing of regulatory approvals and the receipt of financing.

Koffler & Co. acted as financial advisor to Jenny Craig, and Houlihan Lokey acted as financial advisor to the special committee of directors.

Jenny Craig owns or franchises about 650 weight loss centers worldwide, and the firm's headquarters will remain in Southern California.

http://biz.yahoo.com/rf/020128/n28301209_1.html