Herbalife falls short of buyback target; shares fall

Mon Dec 24, 2012 12:21pm EST

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(Reuters) - Shares of Herbalife Ltd (HLF.N), the target of short-seller William Ackman, fell further after the company said it was yet to use $950 million of its authorized $1 billon share buyback program due to some trading restrictions.

The stock of the nutritional supplements seller fell as much as 11 percent to $24.24, their lowest in more than two years.

Herbalife's shares have shed more than a third of their value since Wednesday, when Pershing Square's Ackman said he was shorting the stock and that the company was a "pyramid scheme".

The stock had also taken a beating in May, when the company accelerated another share buyback program after influential short-seller David Einhorn questioned the composition of its distributor network.

Herbalife, which in July announced the plan to buy back $1 billion of its shares over the next 5 years, said on Monday it now expects to exceed its forecast of buying $50 million worth of its shares in upcoming quarters.

Spokeswoman Barbara Henderson declined to comment beyond the statement.

Brokerage B. Riley Caris stopped covering Herbalife on Monday, saying the fundamentals and near-term financial performance of the company would not be the key drivers behind share price performance in the future.

The brokerage's last price target on the stock was $101. The stock was down 5 percent at $25.84 Monday afternoon on the New York Stock Exchange.

Herbalife, which competes with Weight Watchers (WTW.N), Nutrisystem (NTRI.O) and Medifast Inc (MED.N), said it retained boutique investment bank Moelis & Co as strategic advisor.

Herbalife said it would answer questions on its business model in an investor meeting on January 10.

(Reporting by Arpita Mukherjee in Bangalore; Editing by Joyjeet Das and Saumyadeb Chakrabarty)

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