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EXHIBIT 20
FRIDAY JULY 28, 2000
COMPANY PRESS RELEASE
HERBALIFE ADOPTS PREFERRED SHARE PURCHASE RIGHTS PLAN TO PROTECT SHAREHOLDER
RIGHTS
Herbalife International Inc. (Nasdaq NM: HERBA, HERBB) today announced that its
Board of Directors has adopted a Preferred Share Purchase Rights Plan designed
to enable all Herbalife shareholders to realize the long-term value of their
investment in the Company.
Pursuant to the terms of the Plan, the Board of Directors of the Company has
declared a dividend distribution of one Preferred Share Purchase Right on each
outstanding share of Herbalife common stock. Subject to limited exceptions, the
Rights will be exercisable if a person or group acquires 15% or more of the
Company's Class A Common Stock or the combined classes of Common Stock, or
announces a tender offer for 15% or more of the Company's Class A Common Stock
or the combined classes of Common Stock. Under certain circumstances, each Right
will entitle shareholders to buy one one-hundredth of a share of newly created
Series A Junior Participating Preferred Stock of the Company at an exercise
price of $40.00. The Herbalife Board will be entitled to redeem the Rights at
$.01 per Right at any time before a person has acquired 15% or more of the
outstanding Class A Common Stock or the combined classes of Common Stock.
Christopher Pair, President and Chief Executive Officer of Herbalife, said, "The
Plan is not designed to deter negotiated mergers or business combinations that
the Board of Directors determines to be in the best interests of the Company and
its shareholders. To the contrary, the Plan is designed to encourage anyone
interested in acquiring the Company to negotiate with the Board of Directors
prior to attempting an acquisition. We believe this action will assure that all
of our shareholders receive fair and equal treatment and maximum value for their
shares, and will guard against partial tender offers, open market accumulations
and other abusive tactics to gain control of Herbalife without paying all
shareholders a control premium." Herbalife said that adoption of the Plan is not
in response to any specific acquisition proposal. The Rights Plan will expire in
2010.
According to the Plan, if a person becomes an Acquiring Person, each Right will
entitle its holder to purchase, at the Right's then-current exercise price, a
number of shares of Class B Common Stock of Herbalife having a market value at
that time of twice the Right's exercise price. Rights held by the Acquiring
Person will become void and will not be exercisable to purchase shares at the
bargain purchase price. An Acquiring Person is defined as a person who acquires
15% or more of the outstanding Class A Common Stock or of the combined class of
Common Stock of Herbalife. If Herbalife is acquired in a merger or other
business combination transaction which has not been approved by the Board of
Directors, each Right will entitle its holder to purchase, at the Right's
then-current exercise price, a number of the acquiring company's common shares
having a market value at that time of twice the Right's exercise price.
The dividend distribution to establish the new Rights Plan will be payable to
shareholders of record on August 21, 2000. The Rights distribution is not
taxable to shareholders.
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According to a July 1, 2000 report in Mergers and Acquisitions Journal, a 1999
survey by a leading corporate governance watcher indicated that of 1,900 public
companies, 56% had installed shareholder rights plans. The article, which cited
the survey by the Investor Responsibility Research Center (IRRC), said that the
number of companies voting in these plans had increased substantially, from
51.9%, over the last three years.
A letter outlining the shareholder rights plan in more detail is being sent to
Herbalife shareholders.
Herbalife International, Inc. markets nutritional, weight-management and
personal care products in 49 countries worldwide. Herbalife products are
available only through a network of independent distributors who purchase the
products directly from the Company.
