Here’s why the Martha Stewart deal could go sour

The Apprentice: Martha Stewart - Season 1
THE APPRENTICE: MARTHA STEWART -- "Final Approach" Episode 11 -- Pictured: Martha Stewart -- (Photo by: Tommy Baynard/NBC/NBCU Photo Bank via Getty Images)
Photograph by Tommy Baynard — NBC Photo Bank via Getty Images

News broke earlier this week that Martha Stewart Living Omnimedia (MSO), an unprofitable lifestyle business founded by the do-it-yourself maven, would be sold to retail licensing company Sequential Brands Group (SQBG).

Now the word is the deal is in flux, and fingers are pointing toward one particular CEO.

Bidding for the lifestyle guru’s company has been reopened to “at least five prospective bidders,” sources have told The New York Post. This after an announcement on Monday that Sequential would pay $353 million for the company.

The reason is simple: Sequential’s own CEO, Yehuda Shmidman, reportedly leaked details of the deal before it had been finalized. This caused shares of Stewart’s company to rise to almost $7 a piece, above the price of Sequential’s deal.

Sequential was then forced to include a “go-shop” provision in the deal, which gives Stewart the freedom to solicit higher bids for the 30 days following the announcement, the newspaper said. “It went from being a locked-up, no-shop deal to a completely renegotiated, go-shop deal over the weekend,” an insider told The Post.

The list of potential new bidders includes Meredith Corp. — which owns the licensing for the magazine properties — and Iconix, a brand management company with brands such as Peanuts, Ed Hardy, and Mossimo. The uncertainty over the deal is said to have deeply disappointed the board of Sequential, which licenses and promotes brands, including items under pop star Jessica Simpson’s collection, and Justin Timberlake’s William Rast label.

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