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Herbalife to Purchase up to $600 Million of Outstanding Common Shares

BY DSN Staff | August 29, 2017 | read / Daily News / Financial

Los Angeles-based Herbalife Ltd. recently announced it has commenced a “modified Dutch auction” self-tender offer to purchase for cash up to an aggregate of $600 million of shares of its common stock at a per share price not less than $60.00 nor greater than $68.00.

For each share tendered, shareholders will also receive a non-transferable contractual contingent value right (“CVR”) allowing participants in the tender offer to receive a contingent cash payment should Herbalife be acquired in a going-private transaction within two years of the commencement of the tender offer.

The closing price of Herbalife’s common shares on the New York Stock Exchange on Aug. 18, 2017, the last full trading day before the commencement of the tender offer, was $61.95 per share. The tender offer is scheduled to expire at 5 p.m., Eastern Standard Time, on Sept. 19, 2017, unless the offer is extended.

The Herbalife Board of Directors has determined the tender offer, which includes a combination of a cash payment and a CVR for each share, is an appropriate way to return capital to shareholders that seek liquidity under current market conditions while, at the same time, providing such tendering shareholders potential additional value in the event Herbalife is taken private within two years.

Specifically, the company was recently in discussions with a prospective financial investor regarding a potential transaction that could have led to the company being taken private. While these conversations were formally terminated on Aug. 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.

“Our Board and management team are committed to enhancing shareholder value and we believe [this] action is just one more step in meeting this goal,” said John DeSimone, Chief Financial Officer. “We have already acquired during 2017 approximately $299 million of our shares on the open market under our current $1.5 billion share repurchase plan, and we believe this tender offer provides us an efficient way to buy back additional shares at an attractive price.”

In connection with the tender offer, Carl Icahn and his controlled affiliates that own Herbalife shares (the “Icahn Entities”) and Herbalife entered into an agreement with the Icahn Entities on Aug. 21, 2017, pursuant to which the Icahn Entities agreed, among other things and for the two years following commencement of the tender offer, to not increase their aggregate beneficial ownership above 50 percent of Herbalife’s outstanding common shares unless they have agreed to acquire 100 percent of its outstanding common shares.

Demonstrating their commitment and belief in the long-term success of Herbalife, members of the Board of Directors, Herbalife executive officers and Carl Icahn, the company’s largest shareholder, have all advised that they do not intend to tender shares into this tender offer.

The full terms and conditions of the tender offer are discussed in the Offer to Purchase, dated Aug. 21, 2017, and the associated Letter of Transmittal and other materials relating to the tender offer that Herbalife filed with the Securities and Exchange Commission.

Neither Herbalife, its Board of Directors or its affiliates, nor the information agent or the depositary and paying agent, are making any recommendation to shareholders as to whether to tender or refrain from tendering their shares into the tender offer. Shareholders must decide how many shares they will tender, if any, and the cash price within the stated range at which they will offer their shares for purchase by Herbalife. In doing so, shareholders should read carefully the information in the Offer to Purchase and the other offer documents.

For more information about a “modified Dutch auction” tender offer, CVR and other details, go to http://ir.herbalife.com or refer to the Offer to Purchase.

Posted in Daily News, Financial and tagged Herbalife, share, stock.
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