WeightWatchers 2005 Annual Report Download - page 20

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History
Early Development
In 1961, Jean Nidetch, the founder of our company, attended a New York City obesity clinic and
took what she learned from her personal experience at the obesity clinic and began weight-loss
meetings with a group of her overweight friends in the basement of a New York apartment building.
Under Ms. Nidetch’s leadership, the group members supported each other in their weight-loss efforts,
and word of the group’s success quickly spread. Ms. Nidetch and Al and Felice Lippert, who all
successfully lost weight through these efforts, formally launched our business in 1963. Weight Watchers
International, Inc. was incorporated as a Virginia corporation in 1974 and succeeded to the business
started in New York in 1963. Heinz acquired us in 1978.
Artal Ownership
In September 1999, Artal Luxembourg, S.A. (Artal Luxembourg), an indirect subsidiary of Artal
Group, S.A. (together with its parent and its subsidiaries, Artal), acquired us from Heinz. Subsequent
to Artal’s acquisition of us, Artal Luxembourg transferred ownership of its shares in us to Artal
Participations and Management S.A. and Artal Holdings Sp. z o.o., each also members of Artal.
WeightWatchers.com Acquisition
On June 13, 2005, we entered into an agreement to acquire control of our licensee and affiliate,
WeightWatchers.com. On July 1 and 2, 2005, we increased our ownership interest in
WeightWatchers.com from approximately 20% to approximately 53% by (i) exercising warrants to
purchase WeightWatchers.com common stock for a total purchase price of approximately $45.7 million,
(ii) acquiring shares of WeightWatchers.com common stock owned by the employees of
WeightWatchers.com and other parties not related to Artal through a merger of a subsidiary of ours
with WeightWatchers.com for a total purchase price of approximately $28.4 million and (iii) acquiring
additional shares of WeightWatchers.com common stock, representing outstanding stock options then
held by WeightWatchers.com employees, for a total purchase price of approximately $62.3 million.
On June 13, 2005, WeightWatchers.com also entered into a redemption agreement with Artal to
purchase all of the shares of WeightWatchers.com owned by Artal at the same price per share as we
paid in the merger. Subsequently, on December 16, 2005, WeightWatchers.com redeemed all of its
outstanding common stock held by Artal for a total price of approximately $304.8 million as provided
in the redemption agreement. WeightWatchers.com used cash on hand and the proceeds of two credit
facilities in the aggregate amount of $215.0 million to finance this redemption as well as pay related
fees and expenses. As a result of this redemption, we now own 100% of WeightWatchers.com.
The merger and the redemption transactions were evaluated, negotiated and recommended by a
Special Committee of Weight Watchers International’s Board of Directors consisting of its independent
directors.
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