Herbalife Ltd. (NYSE: HLF) opened on Monday strong as shares jumped over 11% after announcing talks to go private, which ended shortly with no decision, and a share buyback plan with Carl Icahn, that came after the talks of going private had ended. Shares jumped after proving Bill Ackman’s position wrong of betting against the Herbalife.
Ackman called Herbalife’s business a pyramid scheme since the nutrition company had gone public and placing a $1 billion short bet against the company. Herbalife has denounced Ackman’s allegations.
Now, Herbalife is in the talks of a share buyback plan and is offering to buy back nearly $600 million worth of shares from shareholders through a modified Dutch process, which allows the company to buy shares at the lowest price possible. Shareholders will be paid back no less than $60 but no more than $68 to "provide tendering shareholders with some protection.” The company also said Icahn as well as any members of the board of directors or the executive team would tender their shares.
The self-tender offer includes a cash payment and a contingent value right that would pay out another cash payment should Herbalife be taken private, according to Market Insiders.
Icahn, who owns about 24 percent of shares, has agreed not to increase his stake above 50 percent unless he buys all the shares, Herbalife said.