China has granted Herbalife Ltd. a direct-selling license for its weight-loss and nutritional supplements, according the company, which also announced a major corporate sponsorship deal with the Los Angeles Galaxy soccer club.
Los Angeles-based Herbalife's business model around the world centers on independent distributors marketing its weight loss and health products, but until now its distributors been restricted to operating out of company owned retail stores in China. The new license so far includes the cities of Suzhou and Nanjing in the Jiangsu province.
Separately, Herbalife said Friday that it had agreed to a five-year, multimillion dollar expansion of its corporate sponsorship deal with the Galaxy that for the first time puts the Herbalife logo on the team's jersey.
Interest in the Galaxy is expected to be high this season since the club signed British soccer superstar David Beckham. The team is owned by AEG, the L.A.-based sports and entertainment company of Denver billionaire Philip Anschutz. Herbalife is slated to move its corporate headquarters from Century City to downtown L.A. when AEG's L.A. Live complex opens in a few years.
"It's fortunate timing, because we had been talking to the Galaxy well in advance of David Beckham news," said Chief Executive Michael Johnson, who had just delivered the news about both deals to more than 4,500 distributors gathered in Los Angeles for the company's annual sales meeting. "David was like the frosting on the cake."
The Herbalife-Galaxy agreement is the second such deal since Major League Soccer became the first of the U.S. leagues to permit corporate branding on uniforms
Herbalife's shares closed up 45 cents to $39.60 on Friday on the New York Stock Exchange. Morgan Stanley analyst William Pecoriello increased his price target on the stock from $46 to $50, primarily on the China announcement.
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