Herbalife is buying back more than half of Carl Icahn’s stake

The legendary activist investor Carl Icahn is dumping a massive chunk of his stake in Herbalife Nutrition and giving up his firm’s seats on the board.

The nutritional supplements company announced Sunday that it is repurchasing some $600 million worth of shares from Icahn Enterprises, his investment company. Herbalife is buying the shares for $48.05 each, the price at which the stock closed before the holiday weekend.

Once the deal closes — expected no later than Jan. 7 — Icahn Enterprises will own roughly 6% of the company’s outstanding shares. That’s less than half of the more than 20 million shares Icahn owns now, according to data provider Refinitiv. His 15.6% stake in the company makes his investment firm currently the largest individual shareholder in Herbalife.

Icahn Enterprises is also losing five board seats, according to the press release. The firm was granted the seats as part of a 2013 agreement as long as it held at least 14 million common shares in the company. The stock was worth about $19 a share when his major stake was disclosed.

“When I began purchasing the shares, I believed it was undervalued for extraneous reasons that I thought made little sense,” Icahn said in a statement. He added that at the time he believed Herbalife was in need of an activist — “and that certainly turned out to be correct.”

“Yet, the time for activism has passed as the Company has grown, and I don’t typically invest billions of dollars in companies where our role as activist is not needed,” Icahn added.

Icahn’s history with Herbalife has been tumultuous, to say the least. He built a massive stake in the company several years ago after a public spat with fellow hedge fund titan Bill Ackman, who had branded the company a pyramid scheme and disclosed a $1 billion bet against the company.

At that time, Icahn branded Ackman a “liar,” a “major loser” and a “cry baby,” while Ackman called Icahn a “bully” who “takes advantage of people.”

Herbalife’s sales practices were eventually investigated by the US Federal Trade Commission, and the company agreed in 2016 to pay $200 million as part of that probe. That settlement cleared the company of any illegality, but the agency still made it clear that Herbalife would have to be more transparent to its distributors and consumers.

Icahn later continued to build up his stake, but has recently been winding it back down.

“Our decision to repurchase these shares is a testament to the strength of our business and our long-term growth prospects,” said John Agwunobi, chairman and CEO of Herbalife Nutrition. “I am grateful to Carl for his friendship, advice and support and deeply appreciate his unwavering faith in our company, our products and our distributors.”