NEW YORK (TheStreet) -- Shares of Martha Stewart Living Omnimedia (MSO) were rising, higher by 3.42% to $6.66 in early market trading Friday, following reports that the global lifestyle company is nearing a deal to be acquired by Sequential Brands (SQBG), according to The Wall Street Journal.
The two companies are in discussions for a merger, with a possible deal to be announced in the coming days, The Journal reports.
Sequential Brands is an acquisitive retail-licensing company that owns such clothing brands including Ellen Tracy, William Rast, Revo, Caribbean Joe, Heelys, DVS, The Franklin Mint and People's Liberation.
Sequential Brands shares are trading up 4.85% to $16.86 today.
Insight from TheStreet's Research Team:
Martha Stewart Living Omnimedia is a core holding of David Peltier's Stocks Under $10 Portfolio. In a recent alert, here is what Peltier had to say about the stock:
Model portfolio holding Martha Stewart Living Omnimedia (MSO:NYSE) is trading 22% higher today, changing hands around $6.23, following a media report of a potential takeover bid.
Dow Jones has reported that Sequential Brands (SQBG:Nasdaq) is near a deal to buy Martha Stewart. Sequential controls brands such as Avia, Heelys, Linens-n-Things and The Franklin Mint. No financial details were offered.
We don't own stocks purely on takeover speculation, but we believe that any potential takeover offer would likely be north of MSO's 52-week high of $6.72. In the meantime, we maintain our Two rating and $7 price target on the stock.
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Separately, TheStreet Ratings team rates MARTHA STEWART LIVING OMNIMD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MARTHA STEWART LIVING OMNIMD (MSO) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow."
You can view the full analysis from the report here: MSO Ratings Report