Herbalife Ltd. (NYSE: HLF), which sells weight management and nutritional supplements to promote a healthier lifestyle, last week turned down the bid by Whitney V LP to buy all outstanding shares of common stock at $38 per share. Whitney already owns 27% of Herbalife. Given that the stock traded at over $39 today, and closed at $38.88 yesterday, I'd say Herbalife made the right decision. Currently, analysts give the stock a 1 year target low of $45 and a high of $50 with 4 major analysts upgrading the stock to market outperform. Why did Whitney make such a low offer?
The stock price is going even higher given the fact that Herbalife recently closed on two big deals that will increase its visibility as a healthy lifestyle product that will further drive sales. Herbalife recently acquired a new license to operate in China. This is a huge new market for western-branded healthy living products tailored to appeal to China's rising middle class, which looks to the West for consumer trends. Closer to home, Herbalife just negotiated a marketing agreement with soccer star David Beckham who left team Real Madrid to sign with the Los Angeles Galaxy, which is heavily promoting their new star. The marketing crossover could introduce Herbalife products to an entirely new set of consumers.
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