Martha Stewart Living jumps 26% on talk of takeover

Martha Stewart Living shares stitched up a serious surge on Thursday amid reports that Sequential Brands was nearing a deal to acquire the publishing and merchandising company. Dow Jones reported the merger talk Thursday afternoon.

A deal could be announced in the coming days, the report said, citing sources with knowledge of the matter.

The stock jumped as much as 26 percent following a brief halt, bringing the company's market value to about $356 million. Shares of Sequential Brands, which operates a portfolio of lifestyle brands such as Jessica Simpson's fashion line, rose about 13 percent on the news.

Martha Stewart Living, a diversified media company, has reported declines it its annual sales since 2007. Sales fell 11.7 percent during 2014. In May, the company blamed the first-quarter sales drop on lower sponsorship revenue.

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Founded by television personality Martha Stewart in 1996, the firm operates three main segments: Publishing, broadcasting and merchandising—its cash cow.

Last month, Martha Stewart Living CEO Dan Dienst said the company was "fully focused on top-line growth by continuing to create our highly monetizable licensed content."

He pointed to its recent deal with Staples and the expansion of its product line at PetSmart as evidence of the firm's progress.

Sequential Brands most recently reacquired the Jessica Simpson brand in a deal that's expected to generate an additional $25 million in sales over the next year, according to PiperJaffray analyst Erinn Murphy. That would account for about 30 percent of Sequential's total annual revenue.

A representative for MSO declined to comment when reached by CNBC on Thursday.