Herbalife Shares Soar on Icahn Stake Increase, Buyout Talk

by Christopher Freeburn | February 15, 2013 9:29 am

Herbalife Shares Soar on Icahn Stake Increase, Buyout Talk

Icahn 106352500 200x300 Herbalife Shares Soar on Icahn Stake Increase, Buyout Talk[1]Reports that billionaire investor Carl Icahn has increased his stake in nutritional supplement maker[2] Herbalife (NYSE:HLF[3]) sent the company’s shares up almost 16% in Friday morning trading.

Documents filed with the Securities and Exchange Commission (SEC) on Thursday revealed that Icahn has acquired a 13% stake in Herbalife and is considering a buyout of the company. Holding more than 14 million shares, Icahn is now the company’second largest stakeholder, Bloomberg noted.

In recent months, Herbalife has become embroiled in controversy over its marketing practices.

Earlier this month, media reports indicated that the company is the subject of Federal Trade Commission investigation[4]. The government has received 192 complaints from former Herbalife distributors, who allege that the company failed to pay them,

Herbalife also came under withering criticism [5]in December from hedge fund manager Bill Ackman, who called it a “pyramid scheme.” Ackman has taken a $1 billion short position against Herbalife.

The SEC documents note that Icahn began buying Herbalife stock shortly after Ackman took his position on the company.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2010/11/Icahn_106352500.gif
  2. has increased his stake in nutritional supplement maker: http://www.businessweek.com/news/2013-02-14/icahn-reports-13-percent-stake-in-herbalife-plans-to-seek-talks
  3. HLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=HLF
  4. is the subject of Federal Trade Commission investigation: http://investorplace.com/2013/02/herbalife-shares-fall-on-report-of-ftc-probe/
  5. also came under withering criticism : http://investorplace.com/2012/12/ackman-blasts-herbalife-as-a-pyramid-scheme/

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