May 03, 2012 at 11:35 AM EDT
Herbalife: If Market Doesn’t Like Our Shares, We’ll Buy Them
Herbalife (HLF) went on the offense this morning, announcing that it will take advantage of the recent sharp drop in its stock price by buying back its shares. Herbalife, which makes weight loss products, is down 33% since the close of trading on Monday, including a 10% drop today. The fall was prompted after activist [...]

Herbalife (HLF) went on the offense this morning, announcing that it will take advantage of the recent sharp drop in its stock price by buying back its shares.

Herbalife, which makes weight loss products, is down 33% since the close of trading on Monday, including a 10% drop today. The fall was prompted after activist investor David Einhorn went on the company’s conference call on Tuesday to ask some pointed questions. Investors took it as a a sign he was shorting the stock, or at least considering a short position.

The company released a statement that it will buy  $427.9 million worth of its shares from Merrill Lynch International starting on May 4 to complete its already authorized $1 billion repurchase plan.

“Under the terms of the repurchase agreement, Herbalife will pay $427.9 million on May 4, 2012 from the Company’s cash on hand and from borrowings under the Company’s senior secured revolving credit facility and will receive a portion of the shares on a pre-determined date and the remainder upon completion of the program.

The total number of shares ultimately repurchased under the agreement will be determined based generally upon the volume-weighted average share price over the course of the program. The transaction is currently expected to be completed by no later than July 2012. Shares that are repurchased will be retired.

Herbalife just reported its best quarter in its 32-year history and has confidence in its business fundamentals, financial results and earning power. The Company executed this share repurchase agreement because it believes its share price is currently undervalued.”

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