William Ackman is ending his crusade against Herbalife Ltd., in what amounts to a bruising defeat in one of Wall Street’s longest-running, most expensive and acrimonious fights.

The activist investor has largely exited his $1 billion, five-year bet against the nutritional products company, sources familiar with the matter said.

It isn’t clear how much Mr. Ackman’s Pershing Square Capital Management LP lost, but it is likely in the hundreds of millions. Herbalife stock, which Mr. Ackman contended would go to zero, hit a new high of nearly $96 Wednesday on the news, earlier reported by CNBC. The shares closed up 6.3% at $92.10.

Mr. Ackman first alleged in December 2012 that Herbalife, which sells through a network of distributors, was an illegal pyramid scheme and would be shut down by the government. He had personally pledged to take his campaign “to the end of the earth,” though he added that Pershing Square would abandon the bet if it got too risky. The company says it is a legal multi-level-marketing organization and fought him at every turn, accusing the investor of market manipulation, which Mr. Ackman denied.

Mr. Ackman’s campaign did lead to some major changes and spurred the Federal Trade Commission to investigate Herbalife. The climax of the drama came when Herbalife settled the probe in July 2016, agreeing to a $200 million penalty over claims it misrepresented earnings prospects for distributors. While the government was critical, it didn’t declare the company a pyramid scheme. The government forced changes in how the company operates to prove customers actually buy its products, but allowed Herbalife to continue operating.

Mr. Ackman contended that the government validated many of his claims and that Herbalife would collapse under the weight of new sales rules. He has pointed to changes the company has made and a drop in earnings as further evidence his campaign was on target.


The stock, however, continued to march higher and Herbalife said its problems were in the past and began buying back shares heavily. The buybacks led Mr. Ackman to restructure his bet last year.

Herbalife, from a relatively obscure company, rose to become Wall Street’s favorite soap opera.

There was a live television shouting match between Mr. Ackman and Carl Icahn, the activist who became Herbalife’s biggest investor in 2013; Netflix aired a full-length documentary that supported Mr. Ackman; and there were star turns by soccer star Cristiano Ronaldo and former Secretary of State Madeleine Albright in support of Herbalife.

Mr. Ackman gave hours of presentations to investors on minutia of Herbalife’s operations, speaking so long he had to pause for bathroom breaks. Herbalife built its own website to lambaste Mr. Ackman and showcase negative stories about him.


Mr. Ackman drew both praise and ire from fellow investors, some of whom deliberately piled into the stock to hurt his investment and others who joined him in betting against Herbalife. He tried to take the fight to Washington, urging regulators and Congress to act.

In the end, investors sided with Herbalife and the company—and Mr. Icahn—won. Mr. Icahn now owns 26% of Herbalife and has made over $1 billion, according to filings.

“Bill Ackman put up a great fight and while I really enjoy a great fight, especially when I believe I’m 100% in the right, and I’m certainly happy we won, much more importantly the company is much better off without this distraction,” Mr. Icahn said in an interview on Wednesday. “I wish Bill well.”

Pershing Square first shorted Herbalife at around $47; factoring in the cost of the bet and lobbying expenses, he originally needed it to fall closer to the $30 range to make a profit. His ultimate losses depend on how much he paid for securities and borrowing costs, which funds don’t have to disclose, and the bet was restructured several times.


The Herbalife loss exacerbated a dramatic turn at Pershing Square, which peaked above $20 billion in assets in 2015 only to plunge to $8.9 billion now, partly on a $4 billion loss on Valeant Pharmaceuticals International Inc.

Over the past 12 months, Herbalife stock rose 65%, surging Wednesday after the company announced a new share-repurchase plan and renamed itself Herbalife Nutrition Ltd.

“For those who aren’t familiar with us, or may misunderstand us, don’t be afraid to get to know us,” Chief Executive Rich Goudis said.

Write to David Benoit at david.benoit@wsj.com