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We have been covering the whole USANA saga to go private and Wentz and co. offering first $26 to take the company private and then upping their offer to $28 before getting completely rejected...twice.

Well what is most interesting is how Wall Street has reacted to the news to abandon talks to go private and the settlement with Barry Minkow. In literally a week, USANA’s stock (NASDAQ: USNA) has seen a huge jump from $28 (Wentz and co. last bid) to a close of $38.15 today - a 38% increase!

For those that may or may not follow MLM public companies, it is very rare to see such growth in a short period of time. No question that all of the news the company has been able to put behind them has helped but another theory comes to mind and that is Wentz had absolutely nothing to lose if his bid was rejected and everything to gain.

For one, USANA got a lot of free publicity out of the talks which gave them greater exposure to trading desks around the country and world. The other key component as we had pointed out since Wentz is the largest shareholder, the rejection by the independent counsel which was hired to review the offer (and later rejected as being far too low) only showed that Went’z stock was undervalued to begin with and people should start buying it up. GENIUS!

So where does that leave Wentz and Gull Holdings today? Combined they own over 16m shares which means they have made (on paper) roughly $160 Million in a week! Not a bad return for making a low-ball offer on your own company huh?

Whether this was planned from the start or is a product of the outcome, I give a lot of credit to Wentz and Gull for the results. It was a brilliant plan that was executed almost flawlessly with incredible results. Oh, and it doesn’t hurt that Minkow is now out of the picture as well.

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We got word that USANA has settled their lawsuit with Barry Minkow and the Fraud Discovery Institute.

In exchange for dropping the lawsuit against Minkow, both Minkow and the FDI agreed that they will no longer trade USANA stock (NASDAQ: USNA). In addition, the FDI will remove all information regarding USANA within their control from their website and will cease from publishing any future statements about the company.

Minkow, who is a convicted criminal, served eight years in jail for stock fraud and when released decided to dedicate his life to torturing network marketing companies (Nu Skin), (Herbalife) and attempting to manipulate their stocks.

Minkow came out with his first negative report about Usana in February of 2007. Minkow went on to buy “put” options on the stock betting that the price would fall. USANA responded by suing both Minkow and the FDI for defamation and stock manipulation.

Apparently after a lengthy battle, both parties were ready and willing to come up with a compromise although it is very unclear what Minkow gets out of this since it seems he has given up all future chances to attack the company but it seems awfully strange that Minkow would agree to no longer trade the stock and will stop talking about USANA.

Hopefully each party is satisfied with the ruling and they can resume business. Minkow is free to torture and manipulate other companies, and USANA, who is in the midst of a corporate restructuring after a failed attempt to go private, can put another legal battle behind them and move on with creating and distributing its nutritional products.

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USANA’s bid to go private is OVER. Gull Holdings, the group led by Myron Wentz, the founder of USANA announced that they are terminating their offer to purchase the outstanding shares and take the company private.  

After losing a battle Monday that halted the bid from moving ahead, Gull was essentially forced to terminate their plans. In addition to the latest loss in court, the offer has been rejected by a specially appointed committee as well as many of the minority shareholders. It became clear to Gull and Wentz that they would not be able to secure the 90% percent of USANA shares needed to complete the offer.

Wall Street had a negative reaction to the news sending the stock down almost 13% to $24.43 in a much higher than trading day.

Gull and Wentz made the original offer of $26 dollars on May 13 and then raised it to $28 dollars on June 30th after the initial offer was rejected. Unfortunately the latter offer did not satisfy minority shareholders or the USANA board.

We have been following this story extensively and have always felt that while the intentions were good, the process in which Wentz and Gull went about the deal was poorly executed.  Aside from the  original bid being way too low, the ensuing lawsuits and standing by the offer even after the independent counsel rejected it made no sense at all. It also ddidnt help Wentz/Gull that economic conditions have only gotten worse since the original offer. Now, hopefully, Wentz can go back to spending time running the company and building even greater shareholder value.  Somewhere in the background you can almost hear Barry Minkow gearing up for another assault on the company. 

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Finally some good news for Herbalife. The company has been plagued lately with lawsuits and bad press over high levels of lead in the products, and I’m sure will take good news anywhere they can get it.

The nutritional supplement company announced that it has received a letter from the L.A. office of the SEC saying that they have completed their year long investigation into the company and has recommended that no action be taken agains the company.

Here’s how it all started…..apparently in mid 2007, the SEC began an investigation into some suspicious activity involving the timing of trading of Herbalife securities by a mid-level employee. The SEC was also investigating the extent of personal use of Herbalife products by distributors and the company’s related policies and procedures.

Herbalife cooperated fully with the SEC and its investigation over the last year and even disclosed to the public the accusations as well as the fact that they were being investigated.

I’m sure this comes as a huge relief to the company that the Securities and Exchange Commission has investigated the company’s practices thoroughly and found no wrong-doing. This is a small ray of hope for the company who is going through some rough times lately. They are still not out of the woods on the lead lawsuit but this was a big hurdle to get over and one they can finally put behind them.

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