Hedge fund manager Bill Ackman told CNBC on Friday he was approached indirectly by Carl Icahn to purchase the billionaire's stake in Herbalife — Ackman's longtime short target.
Asked why Icahn would want to sell his stake in Herbalife, Ackman responded: "I think he knows this is toast" and "he's made bunch of money."
Herbalife shares slumped about 4.5 percent Friday after Ackman made his comments.
Icahn said: "I am not commenting on rumors and stories about what I am doing."
The Pershing Square Capital Management founder confirmed the gist of a Wall Street Journal report that Icahn was considering selling his stake in Herbalife to a group including the nutritional supplement firm's arch-nemesis Ackman.
Icahn "came to me" through investment bank Jefferies Group with a proposal in early August to "cover my short" position, Ackman said on "Squawk Box."
Saying no to Icahn at first, Ackman said he later reconsidered for only for a few million shares. Icahn owns 17 million-plus shares valued at around $1 billion.
Ackman said if he were to buy a small stake and sell it right away, he would probably lose about $30 million. "I would spend $30 million to get Carl out. I would probably spend more."
The Pershing Square chief is still betting against Herbalife — short more than $1 billion on the stock. He's been critical of Herbalife for years, calling it a pyramid scheme — allegations the company denies.
"This is a confidence game. Carl is what creates the confidence in the company. If Carl sells, it can accelerate the demise of the company," Ackman said. "With Carl exiting, I think the thing is over, and over quickly. The sooner he sells the better."
Last month, the Federal Trade Commission reached a settlement with the nutritional supplements company that, while determining Herbalife was not a pyramid or Ponzi scheme, called for the company to change its operations.
"This was a great FTC settlement in terms of the findings, in terms of all the requirements. The requirements don't really take effect until May. It is sort of a slower bleed as the top distributors leave," Ackman told CNBC.
Icahn will be back this year at Delivering Alpha 2016, produced by CNBC and Institutional Investor, which will be held on Sept. 13 in New York.
Ackman first shorted Herbalife on May 1, 2012, and went public with his position in December of that year.
"Carl is great investor," Ackman told CNBC on Friday. "You were right to buy with Carl at $32 a share when he bought the stock. And you were right to sell with Carl when he sells the stock."