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Herbalife Boosts Buyback to $1.5 Billion, Profit Tops Estimates

Feb. 3 (Bloomberg) -- Herbalife Ltd., the vitamin maker accused by hedge fund manager Bill Ackman of being a pyramid scheme, boosted its share buyback by 50 percent to $1.5 billion and announced a $1 billion offering in convertible senior notes.

Fourth-quarter earnings were probably $1.26 to $1.30 a share based on preliminary results, excluding some items, the company also said today. Analysts predicted $1.16, the average of estimates compiled by Bloomberg. Sales rose about 20 percent.

Herbalife, which makes vitamins, skin creams and meal- replacement shakes and operates in more than 80 countries, has denied Ackman’s claim. Ackman’s New York-based Pershing Square Capital Management LP initially sold short at least 20 million Herbalife shares and had lost money on the bet as the stock more than doubled in 2013 and investors, including billionaire Carl Icahn, backed the Cayman Islands-base company.

The initial buyers of Herbalife’s notes, due in 2019, will be Bank of America Corp., Credit Suisse Group AG, HSBC Holdings Plc and Morgan Stanley, the nutrition company said today in a statement. The former buyback program of $1 billion had an available balance of $653 million.

For the current quarter, the company predicted a range of $1.24 to $1.28 for earnings per share. Fourth-quarter results will be released Feb. 18.

U.S. Senator Edward Markey, a Massachusetts Democrat, sent letters last month to the U.S. Securities and Exchange Commission and the Federal Trade Commission urging the agencies to look into Herbalife’s business practices. The announcement was a boon for Ackman, who since December 2012 has been urging regulators, elected officials and community activists to investigate the company, saying it misrepresents sales figures, misleads distributors about potential earnings and sells a commodity product at inflated prices.

The shares gained 3.5 percent to $66.60 at 7:14 a.m. before the markets opened.

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