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Martha Stewart in buyback
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February 24, 2000: 6:08 p.m. ET
To repurchase $32.5M in shares from Time Inc., also in broad marketing pact
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NEW YORK (CNNfn) - Martha Stewart Living Omnimedia Inc. announced Thursday a $32.5 million stock repurchasing deal with Time Inc., as well as a broad new marketing pact between the companies.
Under the agreement, Martha Stewart will buy back 1.366 million shares of its common stock from Time Inc. at $23.79 per share, or a total of $32.5 million.
The deal cuts Time's ownership stake in Martha Stewart Living, the multimedia company headed by home entertainment guru Martha Stewart, to 2.5 percent from 5.2 percent. After the repurchase, Time will own 1.22 million of Martha Stewart's 49.6 million outstanding shares.
Time is owned by Time Warner Inc. (TWX: Research, Estimates), which is also the parent company of CNNfn.com.
Martha Stewart's shares fell Thursday 1-7/16 to 26-9/16 on the New York Stock Exchange.
A Martha Stewart spokeswoman said the pact stems from the company's original intention to buy back all of Time's stake with the proceeds from its initial public offering in October.
Instead, Martha Stewart (MSO: Research, Estimates) opted to buy back some shares and set the new advertising agreement with Time.
Under that pact, Martha Stewart will run ads for its products in Time Inc. publications through 2004, and advertise on Time's Web sites through 2004.
"As part of the discussion with respect to buying back the shares, we realized that they wanted to hold on to a strategic stake, and negotiate a broader strategic agreement," the spokeswoman said.
Time said it would continue to hold Martha Stewart shares for about three years. The deal also extends Martha Stewart's optional renewals on its agreement with Time Distribution Services, which provides newsstand distribution services, through December 2007.
"They have been a big supporter of Martha Stewart Living Omnimedia since the beginning of the magazine and I am happy that they will remain a significant partner and investor in MSO," said Martha Stewart, chairman and chief executive officer of Martha Stewart Living Omnimedia.
Time Inc.'s put and call rights relating to its Martha Stewart equity, as described in its initial public offering, have been terminated. 
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