Icahn and Herbalife have agreed to increase the size of its board of directors from nine to eleven members.
Herbalife will also be adding two Icahn nominees to the board, according to the company's release. He said in an interview with Bloomberg TV that his two top people are at Herbalife.
Icahn also has the right to boost his Herbalife stake up to 25% of outstanding common stock, according to the agreement.
The stock was halted before the news was announced. It was trading up about 3% before the release came out. Since trading has resumed it's up about 7%.
Icahn then phoned into Bloomberg TV to talk about the news.
"We're excited about it. This is not one where we don't like management. We do like management," Icahn said in an interview on Bloomberg TV with Trish Regan. He added that he "frankly doesn't understand" Ackman's criticism of the company.
"We've done a hell of a lot of work on this. We're excited about this," he said.
Icahn also told Bloomberg TV that he would like to buy more stock in Herbalife.
Again, he said he doesn't understand Ackman's short case.
"I don't comprehend...why you have to put out a 300 page report... I don't understand what he did and why he's trashing it," Icahn said, adding that he likes to keep his shorts quiet and gets mad if anyone talks about it.
"I think that Ackman has given us an opportunity to buy a company cheaply, at a discounted price," he added.
Regan asked Icahn if Ackman made a "big mistake".
"Well, if you look at his record lately, he has made a few very big mistakes. I am not going to say just this one. I am not here to question Ackman. I do not want to get pulled into that again…I look at it as a great opportunity. Ironically, I thank him for giving it to me. Does not mean I like him," Icahn told Bloomberg TV.
Here's the full release (via Street Insider):
Herbalife (NYSE: HLF) today announced that it has reached an agreement with Carl C. Icahn, Icahn Enterprises Holdings L.P. and certain related entities (collectively the “Icahn Parties”), which beneficially own, in the aggregate 14,015,151 shares of Herbalife common stock, representing approximately 13.6% of the Company’s outstanding shares. As part of the agreement, Herbalife will increase the size of its Board of Directors from nine to eleven members immediately before the 2013 Annual General Meeting of Shareholders (“the Annual Meeting”). Herbalife’s Board of Directors will nominate two individuals to the Company’s Board of Directors, designated by the Icahn Parties and approved by the Company’s Nominating and Corporate Governance Committee.
Under the terms of the agreement, the Icahn Parties have agreed to, among other things, abide by certain standstill provisions and vote their shares in support of all of the Board’s director nominees. The Icahn Parties have the right to increase the size of their ownership position in Herbalife up to 25% of the outstanding common stock. A copy of the agreement with further detail will be attached to a Current Report on Form 8-K to be filed by Herbalife with the Securities and Exchange Commission.
“We are pleased to have reached this agreement and look forward to working with the Icahn representatives as members of our Board of Directors,” said Michael O. Johnson, chairman and chief executive officer of Herbalife. “We appreciate the Icahn Parties’ shared views on the inherent value of Herbalife’s operations, products and future prospects.”
“Over its long history, Herbalife has proven its ability to increase revenues and returns, and we will work with the Company to build on its results,” said Mr. Icahn. “We conducted considerable research on Herbalife and its business before making our investment in the Company, and have great respect for its Board and management team, and believe in the Company's great potential. We expect our shareholder representatives to provide positive input into Board decisions affecting the future of the Company.”
The nutritional supplement seller has become one of the most controversial stock lately.
Hedge fund manager
Not everyone agrees with Ackman's short thesis, especially his long-time rival billionaire investor Carl Icahn. Icahn recently disclosed a 12.98% in Herbalife.
Daniel Loeb, the founder of Third Point LLC, disclosed an 8.24% long stake back in January.
More to come...