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Herbalife Bill Ackman

Billionaire Ackman fails to kill 'illegal' Herbalife amid stock recovery

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By John McCarthy, Opinion Editor

July 24, 2014 | 2 min read

Nutrition group Herbalife’s shares rose by a quarter after critic Bill Ackman delivered a supposed “deathblow” to the company he claims is running a “pyramid scheme”.

Herbalife offers a wide variety of nutritional products

Looking into the Herbalife's business practises during a three-hour long presentation in New York, attended by 500 people and streamed 10,000 times, Ackman discussed what he called Herbalife’s “fraudulent” structure.

This was largely ineffective as shares rose by a quarter to $67.77.

Ackman, head of Pershing Square Capital Management, on Monday told CNBC that the presentation would deliver a “deathblow” to the company.

The billionaire, who bet $1bn against Herbalife in 2012, said it runs a pyramid scheme preying on ethnic minorities and the poor - through its nutrition clubs, selling to "phantom, fictitious customers”.

On the diet group’s reliance on unpaid workers, he said: "They are not selling weight loss in these clubs, they are selling business opportunities.

"This is all free labour, totally illegal."

Herbalife responded: "Bill Ackman has over-promised and under-delivered on his $1bn bet against our company."

"After spending $50m, two years and tens of thousands of man-hours, Bill Ackman further demonstrated today that the facts are on our side. We recognise that he is running out of time to make good on his bad bet against Herbalife."

Herbalife was founded in 1980 and specialises in protein shakes, vitamins and dietary supplements.

Herbalife Bill Ackman

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