Herbalife Ltd. (HLF:US), the nutrition and weight-loss company that’s being investigated by the Federal Trade Commission, will delay its shareholder meeting by five days next month to give it more time for discussions with activist investor Carl Icahn.
The company will push the meeting to April 29 in Los Angeles, rather than April 24, according to a statement today. The move will let Herbalife continue talking with Icahn about potentially adding his nominees to the company’s board.
Icahn disclosed early last year that he had taken a stake in the company, saying he would discuss strategic alternatives with management. He has since increased his wager on the company and is now its largest investor, with a 17 percent holding. That’s put him at odds with fellow billionaire Bill Ackman, who is betting against the stock and wants to see the company shut down, saying it’s a pyramid scheme.
The FTC review, announced yesterday, will investigate those allegations. Herbalife shares have fallen 12 percent the past two trading days, hurt by news of the probe. While the investigation isn’t an indication of wrongdoing, it could drag on for months before getting resolved, said Michael Swartz, an analyst at SunTrust Banks (STI:US) Inc. in Atlanta.
Herbalife shares fell 5.4 percent to $57.31 at the close in New York. They have tumbled 27 percent this year.
$1 Billion Bet
Ackman made a $1 billion bet against Herbalife’s shares in 2012 and started working to persuade regulators to shut the company down, saying it misleads distributors, misrepresents sales figures and sells a commodity product at inflated prices. Herbalife has repeatedly denied Ackman’s allegations while winning over Icahn and Post Holdings Inc. Chairman William Stiritz.
Those investors’ support has helped boost the shares, foiling Ackman’s attempt to wager against the stock. His firm, New York-based Pershing Square Capital Management LP, said last month that it had lost 49 percent on the investment.
While the fund reduced his equity short bet against Herbalife last year and replaced it with options, Ackman has vowed to take his fight against the company “to the end of the Earth.”
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