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DRTV brands unite: As Seen On TV to acquire eDiets.com

Known for enticing consumers to buy the latest household gadget, As Seen On TV, Inc. is making its own “must have” acquisition. The company announced Aug.10 that it will acquire direct response weight loss concern eDiets.com in an all-stock transaction valued near $13 million.

The DRTV brand expects the deal to close by the start of 2013—just in time for the peak sales season of diet products and services. As Seen On TV shareholders will control two thirds of the company. EDiets.com will retain its name and be operated as a wholly-owned subsidiary.

EDiets.com competes with larger brands Jenny Craig and Nutrisystem in the market for home delivery of diet meals. Steven Hart, head of corporate strategy and development for As Seen On TV, says that eDiets.com’s reliance on print and short-form TV advertising leaves it room to grow with longer-form televised spots, where its larger competitors have enjoyed success.

“When the opportunity arises to buy brands that show proven demand for product, we look for brands that lend themselves to accelerating their growth through infomercials,” he says.

The marketing functions of the two companies will be combined. Reflecting the growing trend of DRTV embracing new media,, As Seen On TV’s social media agency BrightShop Digital will also be assigned to the eDiets.com account.

In addition to a recognized brand, the diet marketer will provide some much-needed diversification for As Seen On TV. For the fiscal year ending March 31, 2012, more than 63 percent of the company’s revenue came from sales of a single portable heater product.

On Monday, eDiets.com closed the sale of its corporate services line of business to an outside firm. Hart said As Seen On TV regarded the corporate services as “non-core” and that there are no plans to spin off or divest any other eDiets.com operations.

Although eDiets.com’s $22 million in annual revenue dwarfs As Seen On TV’s, the company has racked up considerable losses in its 16 years of existence. In its most recent annual report, eDiets.com’s independent accounting firm issued a “going concern” warning.

Hart says that the financial health of eDiets.com is “not an issue,” reiterating the company’s faith in eDiets.com’s new management. Earlier this year eDiets.com appointed former Nutrisystem CMO Tom Connerty as CEO. As Seen On TV expects Connerty and his management team to remain at the company, but no retention terms were disclosed.

As Seen On TV and eDiets.com are both publicly traded, but neither trades on a major U.S. exchange. At press time, shares in ASTV were unchanged from the previous closing price on August 8 (no shares traded hands yesterday), while eDiets.com traded modestly higher.

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