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What Happened At Herbalife That Would Boost Shares Higher By 8%?

HLF | August 21, 2017

One of the most debated stocks over the past few years has been Herbalife Ltd. (NYSE: HLF) — but that conversation could soon come to an end as the company may be in talks to sell itself.

Ivan Feinseth of Tigress Financial Partners told Benzinga last week that investing in Herbalife is no different from investing in any other company. Specifically, there are risks and concerns in every business model, but Herbalife's business model isn't a reason to not invest in the company.

"While [Herbalife] has received criticism sometimes in the past," he said. "It is in my view the equivalent of an insurance company that hires people to sell insurance. There's all kinds of operational risk in every company. Yes it is a risk, yes it is a concern, but there are a lot of risks and concerns no matter what type of business model you have" (see Feinseth's track record here).

Major PE Firm To Put An End To The Debate?

The debate between Herbalife's stock could come to a quick end following reports the company is looking to sell itself.

Herbalife said it has begun a modified Dutch auction self-tender offer to acquire up to $600 million worth of its stock, Market Watch reported. Doing so would better position shareholders in the event that the company goes private within the next two years.

Herbalife has already held talks with a financial investor to take the company private, but discussions were formally terminated last week.

"While these conversations were formally terminated on August 16, 2017, because these discussions contemplated the possibility of the Company being taken private, the Board of Directors decided to provide tendering shareholders with some protection in the event the Company is taken private within two years resulting in remaining shareholders possibly receiving a higher price than paid in the self-tender," the company said in a statement.

Herbalife investors who tender their stock will be paid at least $60 a share and as much as $68 per share with a contingency value right attached to the sell. Major investor Carl Icahn said he won't increase his stake in Herbalife above 50 percent unless he agrees to acquire 100 percent of the shares.

Separately, CNBC's Scott Wapner tweeted: "People familiar with conversations tell me $HLF held talks with "major" PE firm. Due-diligence was completed. Talks could resume."

At last check, shares of Herbalife were up 8.44 percent at $67.18.

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