On April 18, 2018, Herbalife Ltd. (the “Company”) issued a press release announcing the commencement of a modified “Dutch auction” tender offer to purchase its common shares, par value $0.001 per share (the “common shares” or “shares”) (CUSIP G4412G101), for an aggregate cash purchase price of up to $600 million and at a per share price not greater than $108.00 nor less than $98.00, net to the seller in cash, less any applicable tax withholding and without interest, and as adjusted for any stock split, upon the terms and subject to the conditions described in the Offer to Purchase dated April 18, 2018 (the “Offer to Purchase”), and in the corresponding Letter of Transmittal (“Letter of Transmittal,” which together, as each may be amended or supplemented from time to time, constitute the “Offer”).
The Offer, proration period and withdrawal rights will expire at 5:00 p.m., New York City time, on May 16, 2018, unless the Offer is extended or withdrawn (such date, as it may be extended, the “Expiration Time”).
Upon the terms and subject to the conditions of the Offer, promptly following the Expiration Time, the Company will determine a single per share price, which will not be greater than $108.00 nor less than $98.00, net to the seller in cash (the “Cash Purchase Price”), less any applicable tax withholding and without interest, and as adjusted for any stock split, that the Company will pay for shares properly tendered for an aggregate Cash Purchase Price of up to $600 million. The Cash Purchase Price will be the lowest price per share not greater than $108.00 nor less than $98.00 per share (in multiples of $0.25), as adjusted for any stock split, at which shares have been properly tendered in the Offer that will enable the Company to purchase the maximum numbers of shares for an aggregate Cash Purchase Price of up to $600 million. If fewer than such number of shares as would enable the Company to purchase shares pursuant to the Offer for an aggregate Cash Purchase Price of up to $600 million are properly tendered, the Company will select the lowest price that will allow it to purchase all the shares that are properly tendered. In accordance with the rules of the Securities and Exchange Commission (the “SEC”), the Company may increase the number of shares accepted for payment in the Offer by no more than 2% of the outstanding shares without extending the Offer.
Assuming that the conditions to the Offer are satisfied or waived, at the minimum purchase price of $98.00 per share, the maximum number of shares that the Company will purchase is 6,112,448 if the Offer is fully subscribed and the Company does not increase the amount of the maximum aggregate Cash Purchase Price to be paid the Offer, which would represent approximately 6.9% of the Company’s outstanding shares as of April 16, 2018. Assuming that the conditions to the Offer are satisfied or waived, at the maximum purchase price of $108.00 per share, the maximum number of shares that the Company will purchase is 5,555,555 if the Offer is fully subscribed and the Company does not increase the amount of the maximum aggregate Cash Purchase Price to be paid the Offer, which would represent approximately 6.3% of the Company’s outstanding shares as of April 16, 2018.
The Company is currently soliciting shareholder approval of a previously announced two-for-one stock split. If approved at Herbalife’s Annual General Meeting of Shareholders to be held on April 24, 2018, the Company expects the common shares will go ex-dividend on the New York Stock Exchange on May 15, 2018. The Depository Trust Company (“DTC”) is expected to allocate split share entitlements on May 17, 2018 (the day after the tender offer is scheduled to expire). Accordingly, when completing the Letter of Transmittal shareholders should specify the total number of common shares they are tendering on a pre-split basis.
The number of common shares subject to the Offer and the price per share relate to the common shares as outstanding on the date of the Offer. The Expiration Time is currently scheduled two days after the stock split distribution date (May 14, 2018), when the Company expects to effect a two-for-one stock split as described in the Company’s 2018 proxy statement. Following the stock split, the Cash Purchase Price will be adjusted ratably to reflect the increased number of common shares outstanding on a post-split basis.
All common shares the Company purchases in the Offer will be purchased at the same Cash Purchase Price regardless of whether the shareholder tendered, or was deemed to have tendered, at a lower cash price. If the Company’s purchase of all common shares properly at or below the Cash Purchase Price and not properly withdrawn in the Offer would result in an aggregate Cash Purchase Price of more than $600 million, the Company will purchase all common shares properly tendered at or below the Cash Purchase Price on a pro rata basis, except for “odd lots” (lots held by owners of less than 100 shares at the Expiration Time), which the Company will purchase on a priority basis, and except for each conditional tender whose condition was not met, which the Company will not purchase. Common shares properly tendered, but not purchased pursuant to the Offer, will be returned to the tendering shareholders at the Company’s expense promptly after the Offer expires.
The Offer is not conditioned upon the receipt of financing. The Offer, however, is subject to certain other conditions. In the event that any condition specified in the Offer to Purchase is triggered, the Company may waive, in its discretion, such condition prior to the expiration of the Offer in order to proceed with the Offer.
The Board of Directors of the Company (the “Board”) has unanimously approved the Offer pursuant to the recommendation of a committee of the Board, which is comprised solely of individuals, each of whom the Board has determined to be an independent director under Section 303A.02 of the NYSE Listed Company Manual (the “Committee”). However, none of the Board, the Company, the Depositary and Paying Agent (as defined in the Offer to Purchase) or the Information Agent (as defined in the Offer to Purchase) is making any recommendation to shareholders as to whether to tender or refrain from tendering any shares or as to the cash purchase price or cash purchase prices at which shareholders may choose to tender their shares.
In addition, the Company’s directors and executive officers are entitled to participate in the Offer on the same basis as all other shareholders. None of the directors or executive officers of the Company intend to tender any of their shares in the Offer.
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