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Carl Icahn Mulled Selling Herbalife Stake to Group That Included Bill Ackman

Carl Icahn has recently discussed selling his stake in Herbalife Ltd. HLF 1.01 % to a group including the company’s arch-nemesis William Ackman, another surprising twist in a battle between billionaires that has riveted Wall Street for years.

Investment bank Jefferies Group LLC has been seeking over the past month to find buyers for Mr. Icahn’s 18% stake, which is worth roughly $1 billion, people familiar with the matter said. The status of the talks and which other investors may be involved wasn’t clear and Mr. Icahn may sell nothing in the end.

The fact that he even entertained selling his shares, by far the biggest single stake in Herbalife—and that Mr. Ackman could be a buyer—adds more drama to a tug of war over a once-obscure nutritional-products company that Mr. Ackman says is a pyramid scheme, an allegation it denies. The latest development is especially surprising given that just a month ago Mr. Icahn expressed renewed confidence in Herbalife, which in settling a closely watched Federal Trade Commission probe announced he was allowed to boost his stake to just below 35%.

Mr. Ackman kicked off the fight in 2012 with a widely watched presentation and a $1 billion bet that the stock would collapse. Mr. Icahn joined the battle a few months later and soon after got several Herbalife board seats. Since then, the men have screamed at each other on live television and they and the company have traded legal accusations amid multiple investigations and a feature-length documentary that premiered at the Tribeca Film Festival.

Herbalife has fought back just as fiercely against Mr. Ackman. The Los Angeles company has maintained throughout that it doesn’t break the law and accused Mr. Ackman of market manipulation. The stock price has gone...