This investor made billions on Weight Watchers over 23 years and got out just before the stock imploded

By Nathan Vardi

Ray Debbane's legendary bet on the weight-loss brand hit its peak with Oprah and his exit now looks perfectly timed.

One year ago, in March 2023, Ray Debbane announced he would be resigning as chairman of WW International, the parent company of Weight Watchers, whose board he had joined in 1999. A day after Debbane stepped off the board in May 2023, his private equity firm, Invus, sold its 21% stake in the company, ending its 23-year ownership relationship with the company.

In the history of Wall Street, there has never been an investment quite like Debbane's legendary Weight Watchers trade, and now as the stock tanks, it's clear he nailed the exit just before Ozempic steamrolled the weight-loss brand.

On Wednesday, shares of WW International (WW) plunged another 12% after a report surfaced that the company's lenders had hired lawyers to prepare for debt talks. The stock tumbled another 28% by midday on Thursday and is now down 80% in 2024, changing hands for $1.69. Its market capitalization is just $130 million.

Debbane sold Invus' remaining 14.8 million shares last year in a block trade for $106 million, or $7.15 per share, according to data from Verity, an insider trading research and analytics firm. That means in total, the $226 million that Invus invested in Weight Watchers in 1999 turned into $4.8 billion, realized over 23 years.

Over those years, Weight Watchers would tap different celebrities to promote its weight-loss programs - Duchess of York Sarah Fergusson, Charles Barkley, Jessica Simpson, James Corden, Jennifer Hudson, Jenny McCarthy, and ultimately, Oprah Winfrey. These celebrity endorsements were all paid to push the brand, but the biggest winner over the last 24 years is nearly anonymous. A descendant of Belgian sugar barons who resides in Monaco, Eric Wittouck, is the true Weight Watchers king.

Debbane's entire private equity firm is dedicated to investing Wittouck's family office. Over the years, it sold chunks of its Weight Watchers holdings and collected some rich dividends, securities filings show. As a result, Wittouck is now worth $8.5 billion, according to Forbes.

Debbane declined to comment and WW International did not respond to a request to comment.

The Oprah years

It was Debbane who approached Winfrey in 2015 - the ultimate celebrity endorser - about joining the Weight Watchers team. Winfrey had publicly struggled with her weight for years, but signing her on seemed nearly impossible. Weight Watchers itself was struggling, its stock was falling and the company seemed like it was in trouble. Could one last celebrity deal keep this thing going?

Debbane, an excellent deal-maker, crafted a smart arrangement, and unlike the brand's previous celebrity promoters, he made Winfrey a true partner. Winfrey joined Weight Watchers' board and purchased 6.3 million newly issued WW shares, personally paying $43.2 million for the stake, or $6.79 per share. The company also issued Winfrey stock options.

The Winfrey magic worked and by 2018 WW's stock soared above $100. In 2018, Invus sold a slug of its WW stock for $1 billion in proceeds - its last big payday from its Weight Watchers bonanza.

Winfrey also scored big. In total, she made $221 million from WW stock sales after accounting for her initial payment and the exercise cost associated with stock options, Verity data shows. Winfrey sold stock in 2018 and 2021 at an average price of $49.60. In addition, Winfrey contributed some of her WW shares to her charitable foundation, which previously sold WW stock for $48.2 million, according to Verity.

Earlier this month, Winfrey announced she was leaving WW's board and donating her remaining shares and options to The National Museum of African American History and Culture.

The remaining stock options, however, are now not worth much given their higher exercise prices. The move sent WW's stock into its latest tailspin, but the challenge the company was facing goes back to last year.

Drug companies like Novo Nordisk (DK:NOVO.B) and Eli Lilly (LLY) shocked the world in 2023 with advancements in GLP-1 diet medicines like Ozempic, Wegovy and Zepbound. Even Winfrey announced last year that she was taking a weight-loss medication.

In March of 2023, WW announced it was buying Sequence for $106 million to get into the business of remotely prescribing weight-loss drugs, but the move has done little to convince investors that the Weight Watchers brand can withstand the pressure of GLP-1 drugs.

Debbane, originally from Lebanon and based for decades in New York, understood what the company was confronting. Biotechnology is a big area of focus for him and Invus. He made an early investment in BioNTech (BNTX), the German company that co-developed the mRNA COVID vaccine with Pfizer (PFE). His firm currently has a sizable stake in Lexicon Pharmaceuticals. It's also a big owner of Cava Group (CAVA), the Mediterranean culinary brand and restaurant company. Its healthier foods appear better positioned to withstand the Ozempic and diet pill phenomenon than other food or diet companies.

-Nathan Vardi

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03-14-24 1715ET

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