WeightWatchers 2009 Annual Report Download - page 26

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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 the WW.com Credit Facilities (as defined below in
“Item 6. Selected Financial Data—Items Affecting Comparability—Long-Term Debt”) 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 transactions above relating to WeightWatchers.com were evaluated, negotiated and recommended by a
Special Committee of Weight Watchers International’s Board of Directors consisting of its independent directors.
Tender Offer and Share Repurchase
On December 18, 2006, we commenced a tender offer in which we sought to acquire up to 8.3 million
shares of our common stock at a price between $47.00 and $54.00 per share, a transaction that we refer to as the
Tender Offer. Prior to the Tender Offer, we entered into an agreement with Artal whereby Artal agreed to sell to
us, at the same price as was determined in the Tender Offer, the number of its shares of our common stock
necessary to keep its percentage ownership in us at substantially the same level after the Tender Offer. Artal also
agreed not to participate in the Tender Offer so that it would not affect the determination of the price in the
Tender Offer.
The Tender Offer expired at midnight on January 18, 2007, and on January 26, 2007 we repurchased
approximately 8.5 million shares at a price of $54.00 per share. These repurchased shares were comprised of
8.3 million shares that we offered to purchase and approximately 0.2 million shares purchased pursuant to our
right to purchase up to an additional 2% of the outstanding shares as of November 30, 2006. On February 2,
2007, we repurchased approximately 10.5 million of Artal’s shares at a purchase price of $54.00 per share
pursuant to our prior agreement with Artal. In January 2007, we amended and supplemented our revolving credit
facility to finance these repurchases.
China Joint Venture
On February 5, 2008, we entered into a joint venture with Danone Dairy Asia, an indirect, wholly-owned
subsidiary of Groupe DANONE S.A., to establish a weight management business in the People’s Republic of
China. Pursuant to the terms of the joint venture agreement, we and Danone Dairy Asia own 51% and 49%,
respectively, of the joint venture entity, Weight Watchers Danone China Limited. In connection with the joint
venture agreement, we entered into a license agreement in July 2008 to grant the China Joint Venture an
exclusive license within the People’s Republic of China to certain of our intellectual property rights for the
purpose of engaging in the operation of weight management classes, the manufacture and sale of branded
products in the meeting room, the publication of a weight management branded print magazine and the offer of
weight management products and services over the Internet. In consideration for granting these rights, we receive
a royalty of ten percent on all the China Joint Venture’s revenues, net of certain taxes. The license agreement has
a term of ten years and is automatically renewable for successive ten year terms after that time. In September
2008, the China Joint Venture launched its first weight management services centers.
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