Shaklee

History

Founding

Forrest C. Shaklee (1894–1985), a chiropractor and nutritionist based in his home state of Iowa, and later in Oakland, California, created the first vitamin in the United States labeled "Shaklee's Vitalized Minerals" in 1915. In 1956, Shaklee founded the Shaklee Corporation with his two sons to manufacture nutritional supplements. Shaklee chose the multi-level marketing business model to market their product. Starting in 1956, Shaklee began marketing organic, biodegradable cleaning products.

Expansion, divestiture, and changes of ownership

Shaklee Corporation was a publicly traded company in the late 1970s and was listed on the New York Stock Exchange. In 1973, the firm relocated its business offices from Hayward, California, to the Watergate office complex in Emeryville. In 1980, the company relocated again to the One Front Street skyscraper in San Francisco's Financial District. In 1982 Shaklee was included in the Fortune 500 list. The company expanded its business operations in 1986 by acquiring Bear Creek Corporation, a direct marketing firm known for its Harry and David Fruit-of-the-Month Club, from RJR Nabisco for $123 million. In 1989, Shaklee sold a 78 percent stake in Shaklee Japan to the Yamanouchi Pharmaceutical Company for $350 million while retaining a licensing agreement and continuing to collect royalty payments from the Japanese operations.

In March 1989, Shaklee Corporation received an unsolicited acquisition proposal from a group led by Minneapolis financier, Irwin L. Jacobs. At the time, analysts estimated Shaklee Corporation's potential leveraged buyout at $35 a share. The Jacobs group had acquired a 14.98 percent stake in the company. Shaklee declared a special dividend of $20 a share. Some observers viewed this as a "poison pill" defense against the takeover, although the company stated otherwise. Shaklee's corporate bylaws included provisions that were triggered when an investor reached a 15 percent ownership threshold.

Shortly after, Jacobs increased his stake, however Shaklee Corporation subsequently announced its acquisition by Yamanouchi Pharmaceutical for $28 per share in a deal valued at approximately $395 million. Yamanouchi's existing partnership with Shaklee Japan was cited as a factor in the acquisition. Following the announcement, Jacobs declined to challenge the offer and the acquisition was finalized, making Shaklee a privately held company. In 2000, the company moved its headquarters from San Francisco to Pleasanton, California.

In 2004, Yamanouchi sold Shaklee Corporation to American multi-millionaire Roger Barnett, managing partner of Activated Holdings LLC and a member of the Wolfson family, for $310 million. Around the same time, Bear Creek and the Harry and David line was sold to investment firm Wasserstein Perella & Co. for $260 million.

Shaklee has made environmental sustainability a part of its public brand messaging. In 2022, the company announced the launch of a body care collection described as "clean" and “anti-aging.”

FTC actions

In 1974, Shaklee Corporation agreed to stop marketing its product "Instant Protein" as suitable for infants and to discontinue claims that misrepresented the product's protein content, following an order from the Federal Trade Commission (FTC). In 1976, the FTC sanctioned Shaklee again for pressuring its distributors to maintain or advertise suggested retail prices.

Controversy about Shaklee Distributors

In 2012, New England distributor John "Jack" William Cranney was charged with using the reputation of his 45-year affiliation with Shaklee to solicit financial investments from other Shaklee distributors for non-Shaklee investments, beginning in 2002. In July 2012, the Massachusetts Securities Division charged Cranney with implementing a financial investment Ponzi scheme to defraud 36 victims in multiple states of roughly $10.4 million and for using the funds for personal gain. Shaklee immediately suspended distributor payments to Cranney estimated at $45,000 per month. Several victims sued Cranney to recover damages and he sought federal bankruptcy protection for his home, valued at $3 million. Cranney lost the battle for his home and the proceeds from the sale were used to satisfy the claims of some of his alleged victims. In September 2014, the FBI arrested Cranney in El Paso, Texas and charged him with four counts of wire fraud, 16 counts of mail fraud, and three counts of money laundering.

References

References

1. "Contact Us".
2. (1982). "The Shaklee Story". Barnes & Noble Books.
3. (December 17, 1985). "Dr. Forrest Shaklee; Founded Corporation". The New York Times.
4. (November 11, 2007). "The History of MLM". First Class MLM.
5. "2022-2023 Shaklee Incentive Booklet (U.S.)".
6. (July 11, 1973). "Shaklee Will Move Offices". [[Oakland Tribune]].
7. (November 4, 1986). "Shaklee to Buy RJR Nabisco Unit". The New York Times.
8. (February 3, 1989). "Shaklee to Sell Japanese Stake". The New York Times.
9. Fisher, Lawrence M.. (March 4, 1989). "Shaklee Gets Takeover Offer From Jacobs". The New York Times.
10. (February 25, 1989). "Jacobs Increases Stake in Shaklee". The New York Times.
11. Fisher, Lawrence M.. (March 15, 1989). "Japan Drug Maker to Buy Shaklee". The New York Times.
12. (March 15, 1989). "Jacobs Cuts Stake in Shaklee to 10.5%". The New York Times.
13. (April 18, 1989). "Shaklee Offer Done". The New York Times.
14. "History of Shaklee Corporation – FundingUniverse".
15. (April 3, 2004). "Japanese Drug Company To Sell 4 Units, Including Shaklee". The New York Times.
16. (October 11, 2011). "Wasserstein Haunts Harry & David in Buyout Doomed to Bankruptcy". Bloomberg Markets Magazine.
17. "Shaklee U.S. leads the way on global climate change issue". Shaklee, Inc..
18. (April 22, 2007). "Eco-Socialites Make Cleaning Green a Priority". The New York Times.
19. "Shaklee wins 2009 Green Power Leadership Award". Shaklee, Inc..
20. "Shaklee wins 2009 Business Environmental Awards". Shaklee, Inc..
21. "Shaklee is on Top 20 Retail Partner List with the US Environmental Protection Agency's (EPA) Green Power Partnership". Shaklee, Inc..
22. "Shaklee wins 2008 Stevie Award". Shaklee, Inc..
23. Federal Trade Commission. "In the matter of Shaklee Corporation consent order, etc. in regard to alleged violation of the Federal Trade Commission Act". FTC.
24. Federal Trade Commission. "In The Matter Of Shaklee Corporation Co:-Sent Order, Etc., In Regard To Alleged Violation Of The Federal Trade Commission ACT". FTC.
25. Healy, Beth. "Friends fight to recover money from Belmont businessman". Boston Globe.
26. "John William Cranney: Notice of Adjudicatory Proceeding". Commonwealth of Massachusetts.
27. United States Bankruptcy Court District Of Massachusetts Eastern Division. "Motion of United States Trustee To Convert Chapter 11 Case To Chapter 7". Government Printing Office.
28. Healy, Beth. "Belmont businessman pressed on funds in court: Jack Cranney says FBI seized records of losses". Boston Globe.
29. Barrett, Stephan. "Prominent Shaklee Distributor Accused of Operating Ponzi Scheme". The Skeptical Guide to Multilevel Marketing.
30. Healy, Beth. "Ex-Belmont businessman arrested on fraud charges". Boston Globe.
31. ((Department of Justice, U.S. Attorney's Office, District of Massachusetts)). "Former Belmont Resident Charged With $6 Million Investment Fraud Scheme". United States Department of Justice.