Carl Icahn Dilutes Stake In Herbalife To 6%: Report

Icahn Enterprises L.P. IEP founder Carl Icahn has disposed of a sizeable amount of his stake in the dietary supplement selling multi-level marketing company Herbalife Nutrition Ltd HLF, according to the Wall Street Journal.

What Happened: Icahn is also relinquishing the seats of his representatives on the company’s board, as per the WSJ report Sunday.

Icahn offloaded about $600 million of his 16% stake. The Journal cites sources who claim that after the sale Icahn now holds a 6% ownership with an approximate valuation of $400 million. He will also cede control over five board seats filled by his representatives.

The company has agreed to buy back Icahn’s stake at a price equal to the stock’s closing quote on Thursday.

Why Does It Matter: According to WSJ, Icahn’s spree of buying Herbalife stock started back in 2013, and that he has been the largest shareholder of the company since then. Icahn reportedly sold off some of his shares in 2018 for $550 million.

Herbalife’s market cap at the end of 2020 was around $6.32 billion and based on the Journal’s report, Ichan generated over $1 billion collectively from his investment in the dietary supplements company.

In 2016, Herbalife’s business model faced criticism from hedge fund manager Bill Ackman. Icahn's rival activist investor held a $1 billion short position against Herbalife till 2018, reports the Journal.

Price Action: HLF closed Thursday at $48.05, 0.54% higher.

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