Buyout Bid Juices Herbalife

Editor's note: This Breakout Stocks Alert was originally sent to subscribers Feb. 5 at 9:37 a.m. EST. It's being republished as a bonus for TheStreet.com and RealMoney.com readers.

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Herbalife (HLF Quote) received a takeover bid Friday after the close, and we'd like to update readers on the implications. The stock is trading sharply higher to $39.50, and we are moving it to a Two rating and trimming 200 of the 550 shares in the Breakout Stocks model portfolio.

Private-equity firm J.H. Whitney issued a proposal to acquire Herbalife for $38 a share in cash, a 15% premium to Friday's closing price. Whitney actually took Herbalife private in 2002 with another private-equity firm, Golden Gate Capital, before taking it public in December 2004. Whitney owns 27% of Herbalife's stock, and its managing partner, Peter Castleman, serves as chairman of Herbalife's board of directors. So Whitney has a good understanding of Herbalife's business. ...