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Herbalife is Official Nutrition Sponsor for Vietnam's Athletes

Global nutritionist company Herbalife Ltd. HLF recently announced that the Vietnam Olympic Committee (VOC) has named Herbalife Vietnam as the Official Nutrition Sponsor for Rio 2016.

Not only that, Herbalife Vietnam has signed a new five-year sponsorship with Vietnam Sports Administration (VSA), making it the Official Nutrition Sponsor of Vietnam Sports from 2017 to 2021.

We note that Herbalife has been engaged in sports nutrition sponsorship in Vietnam for years.  This new agreement paves the way for Herbalife to continue its role and be a sponsor for Vietnam’s Olympic athletes, as well as provide its wide range of nutrition products, sports nutrition consulting and training to athletes and coaches participating in the Rio 2016 Olympics and Paralympic games. Herbalife will also provide apparel and sports nutrition products to all Vietnamese teams and athletes participating in international sports competitions including three Southeast Asian (SEA) Games (2017, 2019, 2021), three ASEAN Para Games (2017, 2019, 2021), the 2018 Asian Games, and the 2020 Summer Olympic Games.

Herbalife, being a global nutrition company, is committed toward providing weight management, energy and fitness and personal care products through dedicated Independent Herbalife Members in more than 90 countries.

However, the company has been the target of activist investor William Bill Ackman, hedge fund manager of Pershing Square Capital Management since Dec 2012. Ackman believes that the company was running a pyramid scheme business model, in which profits are largely derived from recruiting new distributors and not from selling products. Such models are illegal because they eventually collapse once there are no more people to recruit. He also launched his $1 billion short position in Herbalife shares in 2012.

Since then Ackman has been trying every means to prove that Herbalife runs a pyramid scheme model. The company clarified that it operates like a multi-level marketing company similar to Nu Skin Enterprises Inc. NUS, USANA Health Sciences Inc. USNA and Avon Products Inc. AVP.

However, Ackman's back-to-back allegations prompted a civil investigative demand in 2014 from the FTC related to the company’s marketing practices. Herbalife is reportedly in talks with the U.S. Federal Trade Commission (‘FTC’) about resolving a probe into whether the company is a pyramid scheme.

Herbalife carries a Zacks Rank #3 (Hold).

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