One of several firms advising Ackman and Pershing Square in connection with Herbalife is Kirkland & Ellis, which is fielding a team led by M&A partner Stephen Fraidin in New York and litigation partner Thomas Clare in Washington, D.C.
Fraidin has previously advised New York–based Pershing Square on several high-profile endeavors, including its ultimately unsuccessful 2009 effort to get a slate of five candidates elected to the board of Target—a company in which Ackman holds a 10 percent stake—and its investment in retail rival J.C. Penney the following year.
Kirkland also advised San Francisco–based private equity firm Golden Gate Capital in 2002 when it teamed up with Stamford-based Whitney & Co. to take Herbalife private in a $685 million deal. Chadbourne & Parke advised Whitney on the acquisition, while Gibson, Dunn & Crutcher took the lead for Herbalife on the sale, according to sibling publication the New York Law Journal.
The going-private sale resulted in severance packages for Herbalife's in-house legal department, including former associate general counsel Susan Rule Sandler, according to a report at the time by sibling publication Corporate Counsel. Sandler—who prior to joining Herbalife spent a decade as a partner at Morrison & Foerster—went on to become the top in-house lawyer for the Forest Lawn Memorial Park private cemetery in Glendale, California, according to sibling publication The Recorder.
Herbalife's private equity owners cashed out of their investment in late 2004 when the company raised $345 million through an initial public offering. Gibson Dunn and offshore firm Maples and Calder advised Herbalife, while Skadden represented underwriters on the listing. An SEC filing by Herbalife at the time showed that the IPO generated nearly $1.5 million in legal fees and expenses.
Founded in 1980, Herbalife has served as a veritable fountain of work for a variety of firms over the years. Among the legal entanglements: a nasty estate battle sparked by the 2000 death of company founder Mark Hughes from an accidental overdose of alcohol and antidepressants. The executor of Hughes's estate also sued infamous Hollywood investigator Anthony Pellicano in 2007—a year before the disgraced private detective was convicted on federal racketeering charges.
Herbalife was also caught up in litigation a decade ago over the sale of dietary supplements and other products containing ephedra, a stimulant banned by the Food and Drug Administration in late 2003. It wouldn't be the last regulatory headache for Herbalife.
The New York Times reported late Wednesday that the SEC had opened an investigation into the company.
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