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Cramer: Expect Ackman 'Biochemical Assault' on Herbalife

Tuesday, 9 Apr 2013 | 12:01 PM ET
Tuesday's Market Roadmap
The "Squawk on the Street" news team reports on today's top business headlines, including the ousting of JC Penney's Ron Johnson and what's at stake for hedge fund manager Bill Ackman.

Before trading in Herbalife shares was briefly halted Tuesday morning, CNBC's Jim Cramer said he expected activist investor Bill Ackman to do something drastic against the nutrition supplement company to take the spotlight off JC Penney.

Ackman's hedge fund is the largest holder of JC Penney stock. On Monday, the ailing retailer's board ousted Ron Johnson as CEO and brought back Mike Ullman in an attempt to save the company.

(Read More: Back to the Future: Mike Ullman Rejoins JCP as CEO)

"You are going to see an atomic assault—no, biochemical. It's going to be a biochemical assault on Herbalife within the next 48 hours," Cramer said on "Squawk on the Street" on Tuesday. "You have to do that if you're Ackman. I think he has to do this. This is what you do. This is the time that Ackman has to take the heat off of JC Penney."

Ackman, the CEO of hedge fund Pershing Square Capital Management, has announced a large short position on Herbalife. An acerbic critic of the company, he has said he expects Herbalife stock to go to "zero." Ackman made waves in the market when he clashed with billionaire Carl Icahn, Herbalife's largest shareholder.

"I expect it to be well orchestrated," Cramer said. Herbalife CEO "Michael Johnson, right now look out! Carl Icahn, look out!" Cramer said.

Shortly after Cramer's comments, trading in Herbalife stock was halted for much of Tuesday morning. The company announced that KPMG had resigned as its auditor when it was discovered that a KPMG partner had allegedly disclosed insider information to a third party. KPMG said stocks in two West Coast companies were involved, but it didn't identify either company.

(Read More: KPMG Resigns as Herbalife Auditor; HLF Shares Halted)

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul

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