Shareholder says participation in Herbalife buyout likely

November 14
11:56 PM 2013

According to the fourth largest shareholder in Herbalife Ltd, he is willing to participate in a leverage buyout of the multi-level marketing company. In a report by the Winston-Salem Journal, Bill Stiritz expressed his interest to take part in the transaction that would provide rewards to shareholders and allow the shareholders to exit from allegations of a pyramid scheme.

Stiritz said, "The situation is pregnant for a recap or leveraged buyout of Herbalife, and I would be willing to participate."

Stiritz has a 5.3% ownership interest in the nutrition company, which also sells products in skin care and weight management. Stiritz had declined that he had talked to Carl Icahn, also one of Herbalife's shareholders, to Bloomberg News.

A known activist investor, Icahn is Herbalife's largest shareholder in terms of ownership stake at 17%. Icahn earlier said this year that taking the company private would be an option that he would like to engage with the management of Herbalife.

According to Winston-Salem Journal, a leveraged buyout of the nutrition company would allow Herbalife to stay away from the public eye. Herbalife had been defending itself from billionaire hedge fund manager Bill Ackman, who accused the former of an illegal pyramid scheme operation. A pyramid scheme involved a promise to willing participants services, or in most cases, payment for enrolling other people into the business instead of any real investment. This, as per definition, is an unsustainable business model.

Herbalife spokesman spokesman Julian Cacchioli said on Thursday the company would be hiring additional 250 full-time employees before the year ends, and would have a staff of 500 in time for the opening of its local plant opening and production in Winston-Salem next year. The plant formerly owned by Dell Inc had been bought and renovated by Herbalife for USD130 million in capital spending. Cacchioli, however, said Herbalife does not have a comment on Stiritz's statement.

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