Herbalife shares are up about 8% Monday morning after the company disclosed that it had discussions to go private.
Herbalife also said in a statement Monday morning that it is offering a “modified Dutch auction” — buying back $US600 million of shares between $US60 to $US68 a pop. The deal offers those who sell back their stock to get paid should Herbalife be acquired within two years.
The company said it decided to offer the stock tender after holding discusssions with a private investor, though those talks were terminated August 16.
Carl Icahn and his entitites are the largest shareholders, and are not allowed to increase their ownership above 50% of Herbalife’s standing shares unless they buy all of them, the statement added.
Icahn, Herbalife’s board and executive officers do not plan to tender their shares, the company said.
The surge in Herbalife’s stock price is a blow to Bill Ackman’s Pershing Square Capital, the activist fund which famously went short on the supplements company five years ago because it believes the company operates as a pyramid scheme. Pershing Square’s bet has largely gone the wrong way since it was put on.
A Pershing Square spokesman declined to comment. Icahn couldn’t immediately be reached for comment.