Herbalife Shares Tumble After Ackman Confirms Icahn Tried To Sell Stake

(RTTNews) - Shares of Herbalife Ltd. (HLF) are losing more than 5 percent on Friday after hedge fund manager William Ackman confirmed that he was indirectly approached by Herbalife's biggest shareholder and billionaire investor Carl Icahn to buy Icahn's 18 percent stake in the nutrition supplements company.

Herbalife, a multi-level marketing company that sells nutritional supplements and energy drinks, has been at the center of attention for investors ever since Ackman, the activist manager of hedge fund Pershing Square Capital Management, has been betting against the company.

Ackman has called Herbalife a pyramid scheme that would fail and his allegations have led to federal probes against the company.

The Wall Street Journal reported Friday that Icahn recently discussed selling his 18 percent stake in Herbalife to a group including Ackman. Investment bank Jefferies Group LLC is said to have been seeking over the past month to find buyers for Icahn's stake, worth about $1 billion.

On Friday morning, Ackman confirmed to CNBC that he was approached indirectly by Icahn to purchase the billionaire's stake in Herbalife. The hedge fund manager said that Icahn approached him through Jefferies Group with a proposal in early August to cover his short position.

In mid-July, the Federal Trade Commission or FTC said it has determined that Herbalife is not a pyramid scheme. At that time, Herbalife agreed to fully restructure their U.S. business operations.

Herbalife also agreed to pay $200 million to compensate consumers and settle FTC charges that it deceived consumers into believing they could earn substantial money selling diet, nutritional supplement, and personal care products.

Additionally, Herbalife said at that time that it has granted Icahn, Icahn Enterprises Holdings L.P. (IEP) and certain related entities the right to increase the size of their maximum ownership position in the company to up to 34.99 percent of its outstanding common shares from a previous maximum of 25 percent.

Despite the FTC settlement, Ackman has maintained his bet against Herbalife.

Ackman told CNBC, "If Carl sells, it can accelerate the demise of the company, With Carl exiting, I think the thing is over, and over quickly. The sooner he sells the better."

In Friday's regular session, HLF is trading at $58.53, down $3.40 or 5.49 percent on a volume of 1.76 million shares.