Weight Watchers said Oprah Winfrey is acquiring a 10% stake in the company for about $43.5m(£28.1m,€38.4m). She has also been offered the option to buy an additional 5% stake, besides being handed a seat on the company's board.
The former talk show host bought 6.4 million shares at $6.79 per share, the price at which it closed on 16 October. After the news, shares in the weight-loss company doubled to close at $13.92 on the NYSE on 19 October, making the billionaire celebrity richer by about $45 million. She is required to hold her stake for at least two years.
"I believe in the program so much I decided to invest in the company and partner in its evolution," said Winfrey, who will also appear in Weight Watcher adverts.
The endorsement and investments come at a crucial time for the 52-year-old company that has witnessed six consecutive quarters of revenue declines. Its stock price too has tumbled on account of falling memberships and a $2bn debt. Even after the recent surge, Weight Watchers shares are down 44% for the year.
Weight Watchers is controlled by Artal Luxembourg, the investment arm of a European family that bought the business from H.J. Heinz in 1999. This fund, which got the company's stock listed, owns a 51.5% stake.
According to data from The Marketing Arm, Winfrey is among the most powerful celebrities when it comes to influencing consumer behaviour and ranks fourth among 3,786 celebrities. Allen Adamson, former chairman at the brand consultant Landor Associates, said Winfrey primarily influences women over the age of 40 in non-urban markets. "If they can win Oprah's core following that would be a good situation, and then tomorrow they can figure out how to go for younger consumers." Allen said.
Weight Watchers has previously used other celebrities including Sarah Ferguson, the Duchess of York, and singer-actress Jennifer Hudson in its adverts.