Post Holdings Inc Chief Executive Officer Bill Stiritz increased the stake he holds in Herbalife Ltd to 6.4%. Stiritz previously held a 5.3% stake in the nutrition company and is its fifth largest stakeholder. In a filing, Stiritz also said he plans to talk with Herbalife about possible financing and share buyback strategies. He said the discussions will also include the different ways to capitalize on the company's product distribution.
Last week, Stiritz had said he was amenable to joining a leveraged buyout of Herbalife that would reward the company's investors and help defend it against allegations that it was operating as a pyramid scheme. The allegations came from hedge fund billionaire Bill Ackman. The company that makes skin creams, vitamins and meal replacement beverages has said there was no truth to Ackman's claim. Based in the Cayman Islands, Herbalife has operations in over 80 countries worldwide.
The filing of Stiritz said that the 79-year old businessman has conducted an analysis of Herbalife and has come to the conclusion that the firm's business model was sound and that it had a robust distribution system. He also said the long-term growth opportunities for Herbalife were positive. Stiritz added, "The company's market capitalization is undervalued at this time."
Pershing Square Capital Management, the hedge fund firm of Bill Ackman, initially sold at least 20 million shares it held in Herbalife. A Bloomberg report said Ackman had since lowered the equity short position in the firm even as he maintains his bet via options. He has asked regulating agencies in the US, activists and politicians to help close down Herbalife's operations. After Stiritz's filing was disclosed, however, Herbalife shares increased 2.8% to trade at USD 67.80 per share on the New York bourse. At the trading close, share price fell to USD 65.97 apiece.
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