Herbalife (NYSE:HLF), a leading global nutrition company, today issued
the following statement regarding a recent report from ABC News:
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ABC News has revealed new information regarding Bill Ackman’s,
Founder and CEO of Pershing Square Capital, unprecedented $1
billion campaign to manipulate Herbalife’s stock to the detriment
of Herbalife’s shareholders, customers and employees. Mr. Ackman’s
campaign, part of which was uncovered by ABC News, is losing its
credibility with each passing day.
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The previously unreported information includes confirmation that Mr.
Ackman has spent more than $20 million to date on his campaign. This
includes a contractual arrangement to pay an individual up to $3.6
million over 10 years to make accusations against Herbalife, in
addition to Mr. Ackman’s agreement to pay the individual’s legal
fees and arrange his public relations efforts. Importantly, when the
individual was on ABC News – an interview that Mr. Ackman’s PR team
helped to arrange – he failed to disclose the existence of his
contract with Ackman and, in fact, the contract itself contains a
confidentiality clause.
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The payments are only one part of a calculated, coordinated and
well-funded effort by Mr. Ackman and his agents to offer secret,
undisclosed payments to individuals and organizations to bring false
and misleading charges against Herbalife.
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The ABC News story raises a number of important questions that Mr.
Ackman should answer fully and honestly:
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How has Mr. Ackman spent the $20 million?
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Who else has Mr. Ackman or his team of agents and consultants
made payments to, directly or indirectly, or made future
contingency payment offers to?
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Did Mr. Ackman disclose his financial inducement with these
individuals when lobbying state and federal regulators and
lawmakers?
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Herbalife also commented:
Herbalife’s ‘Gold Standard’ consumer-protection rules not only meet, but
in most cases exceed the standards prescribed by the Direct Selling
Association (DSA), of which the Company is a long-time member in good
standing.
We provide clear, accurate and timely disclosures to prospective members
regarding potential income in our Statement of Average Gross
Compensation. Studies have revealed that the vast majority of Herbalife
members have realistic expectations of the business opportunity and the
effort required to succeed at all levels.
Additionally, as noted in the ABC News report, Herbalife is explicit
with its members that “products are not intended to diagnose, treat,
prevent or cure any disease or medical condition, and under no
circumstances should there be any statements, advertising or
implications to the contrary.”
Enforcement of the rules of conduct is a top priority at Herbalife, and
we investigate and take all claims seriously. The Company has a
compliance team of more than 300 people worldwide that monitors members’
activity and enforce Herbalife’s rules. Our compliance operation
includes secret shoppers who investigate compliance on the ground,
web-monitoring companies to track internet-based compliance and several
customer feedback channels.
Herbalife remains focused on operating its business, producing the
finest nutrition products, and generating strong financial results. The
Company’s ongoing ability to do so is further testament to the integrity
of the Company’s business model and the value of its product.
A link to the ABC News story can be found at abcnews.go.com or http://abcnews.go.com/Blotter/bill-ackmans-secret-deal-herbalife-whistleblower/story?id=23415501
A copy of Mr. Ackman’s agreement can be found via ABC News at: http://abcnews.go.com/images/Blotter/agreement_redacted2.pdf
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a global nutrition company that sells
weight-management, nutrition and personal care products intended to
support a healthy lifestyle. Herbalife products are sold in more than 90
countries to and through a network of independent members. The Company
supports the Herbalife Family Foundation and its Casa Herbalife program
to help bring good nutrition to children. Herbalife's website contains a
significant amount of financial and other information about the company
at http://ir.Herbalife.com.
The company encourages investors to visit its website from time to time,
as information is updated and new information is posted.
FORWARD-LOOKING STATEMENTS
Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed in any of our forward-looking
statements. Our future financial condition and results of operations, as
well as any forward-looking statements, are subject to change and to
inherent risks and uncertainties, such as those disclosed or
incorporated by reference in our filings with the Securities and
Exchange Commission. Important factors that could cause our actual
results, performance and achievements, or industry results to differ
materially from estimates or projections contained in our
forward-looking statements include, among others, the following:
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any collateral impact resulting from the ongoing worldwide
financial environment, including the availability of liquidity to us,
our customers and our suppliers or the willingness of our customers to
purchase products in a difficult economic environment;
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our relationship with, and our ability to influence the actions of,
our Members;
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improper action by our employees or Members in violation of
applicable law;
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adverse publicity associated with our products or network marketing
organization, including our ability to comfort the marketplace and
regulators regarding our compliance with applicable laws;
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the outcome of inquiries from regulatory authorities;
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changing consumer preferences and demands;
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our reliance upon, or the loss or departure of any member of, our
senior management team which could negatively impact our Member
relations and operating results;
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the competitive nature of our business;
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regulatory matters governing our products, including potential
governmental or regulatory actions concerning the safety or efficacy
of our products and network marketing program, including the direct
selling market in which we operate;
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legal challenges to our network marketing program;
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risks associated with operating internationally and the effect of
economic factors, including foreign exchange, inflation, disruptions
or conflicts with our third party importers, pricing and currency
devaluation risks, especially in countries such as Venezuela;
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uncertainties relating to the application of transfer pricing,
duties, value added taxes, and other tax regulations, and changes
thereto;
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uncertainties relating to interpretation and enforcement of
legislation in China governing direct selling;
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uncertainties relating to the interpretation, enforcement or
amendment of legislation in India governing direct selling;
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our inability to obtain the necessary licenses to expand our direct
selling business in China;
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adverse changes in the Chinese economy, Chinese legal system or
Chinese governmental policies;
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our dependence on increased penetration of existing markets;
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contractual limitations on our ability to expand our business;
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our reliance on our information technology infrastructure and
outside manufacturers;
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the sufficiency of trademarks and other intellectual property
rights;
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product concentration;
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changes in tax laws, treaties or regulations, or their
interpretation;
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taxation relating to our Members;
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product liability claims;
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whether we will purchase any of our shares in the open markets or
otherwise; and
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share price volatility related to, among other things, speculative
trading and certain traders shorting our common shares.
We do not undertake any obligation to update or release any revisions
to any forward-looking statement or to report any events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events, except as required by law.
Copyright Business Wire 2014