Carl Icahn sold more than half of his stake in Herbalife Nutrition Ltd.
HLF 0.54%
and is giving up his seats on the board of the nutritional supplements company, taking a step back from a long-standing investment he fiercely defended against an attack by rival activist investor William Ackman.
Icahn has sold about $ 600 million of his 16% stake in Herbalife to the company in the past few days, according to people familiar with the matter. This leaves him with a stake of approximately 6%, worth $ 400 million. As his stakes will fall below the level stipulated in an agreement Icahn made with the company, he also plans to forgo the five board seats currently held by his representatives, people said.
The move helps cement a major victory for the octogenarian billionaire, who estimates he has made more than $ 1 billion in profits from the investment.
Mr. Icahn is the largest shareholder in Herbalife since 2013. He remained with the company through challenges from Ackman and regulators and the resignation of its chief executive after he was spotted encouraging a colleague to circumvent the expense account rules.
Icahn bought the shares for the first time in late 2012. The investment represented a high profile challenge for Ackman, who bet against the company and publicly fought against its business model, which depends on a network of distributors, calling it a pyramid scheme. The company said it is a legal multilevel marketing organization and has fought it all the time.
Herbalife has a market capitalization of about $ 6.3 billion.
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Mario Tama / Getty Images
The opposing bets of the two renowned activists led to a bitter public confrontation, with Ackman predicting that the stock would drop to zero and the men exchanging blows in a screaming dispute on live television. Mr. Ackman dropped his $ 1 billion lost bet in five years in 2018.
Mr. Icahn’s deal with the company in 2013 gave him two seats and later he took over on what is now a 13-member board. Its representatives include former deputies Jonathan Christodoro and Nicholas Graziano and longtime general counsel Jesse Lynn.
Herbalife has a market capitalization of around $ 6.3 billion. Its shares were practically stable in 2020, but have risen several times in the past decade. The company reported better-than-expected gains in November in the third quarter and said it expects fourth-quarter sales to increase by 10% to 20% year on year. He also appointed a new chief financial officer.
Herbalife has been buying back shares and the deal with Icahn comes after the company offered to buy a large portion of its shares for the last closing price of $ 48.05, people familiar with the matter said. Icahn accepted the offer in part because he sees no need for additional activism at the company, they said.
Mr. Icahn sold $ 550 million in Herbalife shares in 2018, telling The Wall Street Journal at the time that “There is an old Icahn rule, when you make more than $ 1.5 billion in a situation, you sell a little ”.
Write to Cara Lombardo at [email protected]
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