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Herbalife Ltd. Message Board

  • ron.wallach ron.wallach Feb 20, 2013 6:07 PM Flag

    buyout need


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    Steve Schaefer
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    If you can put the word market after it, I cover it.

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    2/20/2013 @ 5:15PM |414 views

    Herbalife Says It Will Clarify Distributor Disclosures, Ackman Doesn't Buy It

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    (Photo: Melissa Babasin//HERBALIFE)

    Herbalife says it will disclose more detail on how many distributors in its multi-level marketing program are in it to make money, and refine its nomenclature to “simplify” and address the lack of clarity in its organization. It is the murky nature of the company’s disclosures that has been seized on by short seller Bill Ackman in his offensive against the company he says is a pyramid scheme.

    During a Wednesday morning conference call detailing Tuesday’s fourth-quarter earnings report, President Desmond Walsh said the company has updated its disclosure statement to draw a finer distinction between wholesale buyers — those who sign up as distributors simply to buy Herbalife products at a discount — and true distributors who are in it to generate income.

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    The process has been underway since early 2012, Walsh said, before Ackman laid out his short case and even before fellow hedge fund manager David Einhorn of Greenlight Capital — who was short the stock during 2012 but not at year’s end — asked pointed questions on a May earnings call that turned the spotlight on teh comapny.

    It should come as no surprise that Ackman isn’t swayed and isn’t buying the pledge of better transparency Herbalife is wielding.

    “If Herbalife really wants investors to understand their business better and provide full transparency as [CEO Michael] Johnson said on the call, they should start by answering even one of the 284 questions we submitted publicly to them two weeks ago,” reads a statement issued by the hedge fund manager whose firm, Pershing Square Capital, has a short position of some 20 million shares. “To date, they have yet to respond to one of those questions.”

    The plot thickened after the call, with Ackman telling the Los Angeles Times that Herbalife refused to take questions from Pershing during the Q&A portion of the call — a claim the company disputed — which largely included sell-side analysts asking questions about the company’s buyback policy and whether it has had discussions with Carl Icahn.

    Icahn, the billionaire who disclosed a stake last week that effectively gives him nearly 13% of the company, has suggested the company could ramp up its share repurchases to alleviate short pressure or seek out a leveraged buyout.

    Johnson said the firm does not comment on specific investors, before acknowledging he has had “short discussions with Mr. Icahn, but beyond that nothing concrete to report.”

    In a dig at Ackman, Johnson said the company is open to such discussions with anyone “legitimate” who is interested in its business.

    Johnson said the company also has nothing new to disclose on the status of the SEC’s look into its operations. He said Herblife requested a meeting with SEC staff after Ackman made his short presentation in December, and that it will answer any questions regulators have.

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