Herbalife ends talks with investment firm

Herbalife Ltd., a seller of nutritional and weight-loss supplements, said Monday that talks about a sale of the company to its largest shareholder, Whitney & Co., had ended.

A special committee set up to consider an offer was disbanded, Century City-based Herbalife said in a statement.

The company said Thursday that Whitney was considering raising a previous offer of $2.7 billion, which Herbalife had rejected last month. Whitney was among the investors that took Herbalife public in 2004.

“The stock is worth a lot more than what they were bidding,” said Rommel Dionisio, an analyst at Wedbush Morgan Securities in Los Angeles, who rated the shares “buy.” “It’s welcome news because it allows the stock to now trade on its fundamental strength.”

Dionisio doesn’t expect any additional bids for Herbalife.

Whitney controlled 26% of Herbalife shares as of March 19, according to data compiled by Bloomberg. The private-equity firm, based in New Canaan, Conn., helped take Herbalife public two years after joining with Golden Gate Private Equity Inc. to buy it for $685 million and take it private.

Shares of Herbalife fell $1.96, or 4.9%, to $38.31 on Monday. It was their biggest drop since Jan. 5. The stock has gained 16% since Feb. 2, the day Whitney announced its bid.

A message seeking comment from Whitney wasn’t answered. Herbalife spokesman George Fischer declined to comment beyond the statement.

Herbalife products include snack bars, nutritional supplements and cosmetics and are marketed by independent distributors who earn sales commissions.

Herbalife has fended off other offers in the past. In 2001, shareholders Steel Partners II and Jana Partners wanted the company to sell itself or buy back shares.

The investors said Herbalife’s strategy had taken an “alarming direction” after the death of founder Mark Hughes.