INVESTING
Herbalife studies options
Herbalife Ltd., the maker of weight-loss supplements whose shares have been shorted by hedge-fund manager Bill Ackman, hired Moelis & Co. as a strategic adviser.
Herbalife also said it hasn’t utilized the $950 million remaining on its $1 billion share repurchase authorization because of trading restrictions, according to a statement Monday. It said it will exceed the previously announced quarterly guidance of $50 million of the repurchase in upcoming quarters.
Ackman, head of New York hedge fund Pershing Square Capital Management LP, said last week that a year of research convinced him Herbalife is a pyramid scheme. The company, whose shares he began selling short seven to eight months ago, misrepresents sales figures, misleads distributors about potential earnings and sells a commodity product at inflated prices, he said.
The company said last week it would hold an analyst meeting “to respond in detail to the distorted, outdated and inaccurate information” from Pershing Square. Herbalife, based in the Cayman Islands, set the meeting date as Jan. 10.
Shares fell 36 percent in the three days through last Friday as Ackman said he was shorting the stock.
GAMBLING
Legal challenge continues
Four major professional sports leagues and the National Collegiate Athletic Association are poised to move forward with their legal fight over New Jersey’s plans to allow sports gambling.
That comes after a judge last week rejected arguments that the leagues couldn’t prove they would be harmed if the state moves ahead with its plans to allow sports gambling.
In denying the state’s request to dismiss the lawsuit by the NBA, NHL, NFL, Major League Baseball and the NCAA, U.S. District Judge Michael Shipp agreed that they have standing to file the suit because expanding legal sports betting to New Jersey would negatively affect perception of their games.
Shipp cited studies offered by the leagues that showed fans’ negative attitudes toward game-fixing and sports gambling.
New Jersey has argued in court papers that a 1990s law prohibiting sports gambling in all but four states is unconstitutional, and Shipp ordered that a date for oral argument on that issue will be set after Jan. 20.
The federal law prohibited sports gambling in all states but Nevada, where bettors can gamble on single games, and three other states that were allowed to offer multi-game parlay betting. New Jersey has argued the law usurps the authority of state legislatures and discriminates by “grandfathering” in some states.
The leagues filed suit in August after Gov. Chris Christie vowed to defy a federal ban on sports wagering. The Republican governor signed a sports betting law in January, limiting bets to the Atlantic City casinos and the state’s horse racing tracks.
New Jersey has said it plans to license sports betting as soon as January, and in October it published regulations governing licenses. But the state agreed to give the leagues 30 days’ notice before it grants any licenses and hasn’t done so yet.
The state, represented by former U.S. Solicitor General Theodore Olson, had argued before Shipp last Tuesday that the leagues are as popular as they’ve ever been despite the existence of legal gambling in Nevada and more widespread illegal gambling.
The NCAA has said it will relocate several championship events scheduled to be held in New Jersey next year because of the state’s sports gambling push.
ELECTRONICS
Sony exiting batteries?
Sony Corp. is in talks to sell its battery business to Japan’s state-backed investment fund. Innovation Network Corp. of Japan hasn’t made an offer for the acquisition, said a person, who declined to be identified as the information isn’t public. Taiwan’s Hon Hai Precision Industry Co., the world’s largest contract maker of electronics, has also shown interest in the buyout, reports said.
Sony’s Chief Executive Officer Kazuo Hirai has said he would consider alliances for the battery unit as he seeks to refocus the manufacturer on mobile devices including smartphones after losses totaling $10 billion in the past four years. Sales of the company’s Bravia TVs, PlayStation game consoles, Handycam video recorders and Cyber-shot cameras could decline this year against competition from overseas rivals including South Korea’s Samsung Electronics Co.
Lithium batteries, used in smartphones, personal computers, tablets and plug-in electric vehicles, account for the largest portion of the global market for rechargeable cells. The company’s market share in lithium batteries fell to 6.9 percent in the April-June period this year, from 15.4 percent in the first quarter 2008, according to Tokyo-based Techno Systems Research Co.
Sony’s battery business had sales of about $1.7 billion in the year ended March, reports said. The unit had about 2,700 employees as of September.
Sony shares have fallen 34 percent this year, the sixth-worst performance on Japan’s benchmark Nikkei 225 Stock Average, which has gained 18 percent.
Compiled from staff and wire reports.