Paula Deen, the one-time celebrity chef dropped by the Food Network for racial slurs used during a legal deposition, is being given a comeback opportunity.
Paula Deen, a Savannah, GA based cook known for her southern style cooking and characteristically southern wisdom she dispensed on her show, will receive between $75 million to $100 million from a venture capital fund to stage a comeback. Under the terms of the deal, Paula Deen will roll up her restaurants, cookbooks, product endorsements and other media arrangements into one firm, Paula Deen Ventures, which will receive the venture investment.
Paula Deen partners with strategic fund
Deen selected a strategic partner for her investment, Najafi Cos., a private equity firm led by Jahm Najafi, owner of the Book-of-the-Month Club and BMG Music, who brings distribution and marketing firepower to the partnership.
In a report in The Wall Street Journal, Phoenix-based Najafi Cos. said the capital will help Paula Deen establish new deals and move away from a pure licensing model, in which she sells her likeness and expertise to others. Instead, she hopes to take more ownership and control in partnerships with retailers and other companies. Food-industry veteran Steven Nanula was brought in to be chief executive of Paula Deen Ventures, the report said, and the company is in talks with TV networks, retail chains and other possible partners. The new firm has yet to announce a television contract or a major deal – and the Food Network says it has not yet been approached for a Deen revival – Paula Deen Ventures declined to name the TV networks and potential partners it has contacted.
Investing on a drawdown with Deen
Najafi, part owner of the Phoenix Suns basketball team, is known to favor “investing on a drawdown,” or investing when a stock or investment is out of popular favor. Najafi said in the report he doesn’t think Deen is an extraordinary risk and her brand is strong and she has support from a core fanbase across the U.S. Subscriptions to Paula Deen’s magazine are up 40% and her recent appearances have drawn standing room only audiences.