Department store operator J.C. Penney Co. is buying a minority stake in Martha Stewart Living Omnimedia Inc. for $38.5 million and teaming with the media and merchandising company on a store-within-a-store and joint web site.
J.C. Penney says it will buy 11 million Martha Stewart Living shares at $3.50 per share, giving it a 16.6 percent interest in the New York company.
As part of a 10-year deal, the companies will create Martha Stewart retail stores within most J.C. Penney locations starting in February 2013.
The joint web site is also expected to launch in 2013.
Martha Stewart Living is expected to receive more than $200 million from the 10-year deal. Its stock is up 28 percent to $4 in premarket trading.
Penney is based in Plano, Texas.