New York's Martha Stewart Living Omnimedia Inc. and Macy's Inc. announced Thursday that they had settled a lawsuit over a products deal with J.C. Penney Co.
Neither side disclosed details of the settlement, saying only that they were glad "to put this matter behind us." Neither Martha Stewart or Macy's expect the settlement to impact earnings.
Last year, Macy's filed a lawsuit against both Martha Stewart and J.C. Penney over a partnership allowing J.C. Penney to sell Martha Stewart-branded products. Cincinnati-based Macy's claimed it reached an exclusive agreement with Stewart a few years ago.
Earlier this year, a New York state judge ruled that J.C. Penney could sell products made by Stewart's company, but not those with her brand on it. Macy's made plans to appeal that ruling.
In October, Stewart and J.C. Penney revised their product agreement, allowing J.C. Penney to continue to sell Martha Stewart products, including rugs, window treatments and seasonal holiday items. As a result of that new deal, Stewart will receive an undisclosed amount of design fees and royalty payments, as well as 11 million shares of common stock that J.C. Penney owns in Stewart's company.
J.C. Penney has also agreed to pull its representation off of Martha Stewart's board.
Plano, Texas-based J.C. Penney acquired its 11 million shares in Martha Stewart, which represents a nearly 16% stake, in December 2011, in exchange for a $38.5 million cash infusion.
The announcement is the little good news that J.C. Penney has received lately. For the quarter ended Nov. 2, J.C. Penney reported a 5.1% drop in its revenue, to $2.78 billion from $2.93 billion. The company's balance remains under pressure, and J.C. Penney still burns through cash quickly, going through $2.5 billion to $3 billion in the first three quarters of 2013.
In August, J.C. Penney adopted a poison pill to protect itself from any hostile takeovers, but noted that the move was not in response to any particular takeover attempts.
Earlier this year, J.C. Penney hired Blackstone Group LP for financial advice, and industry watchers said at the time that the company could be targeted by private equity firms.
Martha Stewart's shares opened 3.5% higher, to $4.35, on Thursday morning, giving a market capitalization of $406 million.
J.C. Penney's stock opened 1% lower, to $9, with its market cap near $2.7 billion.
Steven C. Todrys joined Evercore's investment banking business as a senior adviser, focusing on transactional tax and structuring solutions. For other updates launch today's Movers & shakers slideshow.
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