The global direct marketing company sells weight-management, nutritional supplements and personal care products in 62 countries via a network of more than one million independent distributors. The original buyout offer represents approximately $2.7bn - an offer that has been reported to be too low.
The company is said to be in a strong position to get a higher price than proposed for its shares, thanks to the inroads it is making into the Chinese dietary supplements market.
"We believe the 2006 sales in Greater China should continue its positive year over year growth primarily as a result of the continued expansion of our retail presence and continued efforts to enhance our product portfolio," the company wrote for the quarter ending September 2005.
Herbalife reported net sales in Greater China increased $10.1m, or 12.3 percent, for the nine months ended September 2006, as compared to the same period in 2005. Since March of 2005, the company had opened 33 retail stores in 20 provinces throughout China and planned to open an another nine during the fourth quarter of 2006.
While the Chinese government dropped prohibitive laws against direct sales companies, the regulations are still restrictive for many companies. As a result, Herbalife has had to use a different business model in the republic than it uses in other markets. In China, Herbalife has company-operated retail stores that sell through employed sales personnel.
Whitney and Golden Gate Capital bought the manufacturer in 2002 and took it public in 2004. In December 2005, Whitney sold 6 million more shares for around $30 per share.
The company's board of directors has set up a special committee to review Whitney's proposal.
"Accordingly, there is no assurance that Herbalife will enter into this or any other transaction," reads a Herbalife statement. "Neither the Company nor the Special Committee intends to comment upon or provide further updates regarding these matters until circumstances warrant."
Herbalife's total un-audited assets were valued at over $375m as of September 2006 and its net sales of came to approximately $1.6b.
After founder Mark Hughes died in 2000, the company found itself fighting a slump in the vitamin and supplements business, especially in the US, which was compounded by its direct sales model.