(Reuters) – Herbalife Ltd. (N: HLF) announced that comply with the Federal Trade Commission of the US for $ 200 million to avoid being labeled a pyramid scheme, a blow to cover fund manager Bill Ackman that for years he has been betting against the manufacturer dietary supplements.
Herbalife shares rose 8 percent to $ 64.08 in premarket trading Friday.
Herbalife also said its board had cleared the way for billionaire investor Carl Icahn to increase its stake in the company to 35 percent from 18.3 percent now.
Icahn and Ackman were involved in a public war of words over their opposing bets on the company, Icahn calling famous manager hedge funds “liar” and a “crybaby” in an interview with CNBC in 2013. Since then, have invented.
Ackman Pershing Square (NYSE: SQ) Capital Management released a short $ 1 billion bet against the company in 2012.
Icahn said Friday it was time for the company to consider strategic opportunities, including potential roll-ups involving competitors.
“While Bill Ackman and I are on good terms, we agreed to disagree (vehemently) on this subject. Summarized in short shorts have been completely wrong on Herbalife,” Icahn said in a statement.
The settlement comes a day after Ackman said he was still betting against the shares of Herbalife and the FTC probe was unlikely to end well for the company as its business model is not based on actual retail sales.
Herbalife said it had agreed to restructure its US business so that distributors are rewarded for what they sell, not the amount of people they recruit.
The company will pay the distributors on the basis of retail sales and provide receipts for their transactions, he said.
“Herbalife will have to start working legitimately so only allegations are true about the amount of money their members are prone to do, and you will have to compensate consumers for losses suffered as a result of what they charge are unfair and deceptive practices, “said the president of the FTC Edith Ramirez said in a statement.
The FTC began an investigation of Herbalife in 2014 by the following claims Ackman that the company had a pattern of fraudulent business compared to a pyramid scheme, which pays more members to recruit new members, and not for sale their products.
In late June, about a quarter of the outstanding shares of Herbalife were carried out by short sellers, according to Thomson Reuters.