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Carl Icahn buys 13% stake in Herbalife as battle heats up

February 14, 2013|By Andrew Tangel
  • Activist investor Carl Icahn has revealed a 13% stake in Herbalife.
Activist investor Carl Icahn has revealed a 13% stake in Herbalife. (Mark Lennihan / Associated…)

NEW YORK -- Corporate raider Carl Icahn has bought a 13% stake in Herbalife Ltd., heating up Wall Street's battle over the Los Angeles-based company under attack by another financial tycoon.

Icahn disclosed his purchase of more than 14 million shares and options in a filing Thursday with the U.S. Securities and Exchange Commission.

Icahn, a major Wall Street activist investor, intends to have talks with Herbalife about possibly taking the public company private, or recapitalizing, according to the filing.

He also sees Herbalife as undervalued, as a company with a "legitimate business model, with favorable long-term opportunities for growth."

The vote of confidence in Herbalife is another jab against Bill Ackman, whose hedge fund Pershing Square Capital Management has taken an enormous $1-billion short position against the company, essentially betting on the company's failure.

Ackman, who last month accused Herbalife of being a pyramid scheme that defrauds low-income distributors of its health foods and nutritional supplements, was locked in a half-hour joint phone interview with Icahn last month -- broadcast live on CNBC.

The news sent Herbalife's stock soaring in after-hours trading. The company's shares gained $7.53, or 19.7%, to $45.80.

"It's pretty obvious Icahn really wants to turn the screws on Ackman," said Chris Stuart, chief executive of Shortzilla, a Boston-area research firm. "He's put his money where his mouth is, for sure."

"This is an amazing story," Stuart added. "I've never seen anything like this."

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