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Bill Ackman is selling his entire stake in Valeant Pharmaceuticals

March 14,2017 00:16

Ackman is leaving a company burdened with over $30 billion in debt and facing several federal investigations over its business practices. Though the market has been absolutely ripping since the start of the year, Valeant's stock is down about 16%. Most ...and more »



Pershing Square founder Bill Ackman.
Reuters

Bill Ackman is leaving Valeant Pharmaceuticals.

The billionaire founder of hedge fund Pershing Square, who was
once the company's biggest cheerleader, has sold his investment
and will step down from the Valeant's board until its upcoming
election.

The stock has fallen about 9% in after-hours trading on this
news.

Jefferies will be handling the transaction for Ackman, selling
27.2 million shares valued at $306,400,000, or $11.10 to $11.40
per share. Sources tell Business Insider that Jefferies is
indicating interest on half the stock and is on the hook for the
balance that doesn't get paid.

The stock closed Monday at $12.10.
CNBC's David Faber first reported the news, citing sources.

With the sale, Ackman is ending a yearslong and often
controversial relationship with Valeant that began with a joint
hostile bid for Allergan Pharmaceuticals in 2014. The deal
didn't pan out, but Ackman wound up acquiring a position in
Valeant in 2015 — just before the company came under fire for its
use of a shady mail-order pharmacy. It's been downhill ever
since, with the stock losing more than 90% of its value,
shareholders suing Ackman and Valeant, and investigations into
Valeant's practices mounting.

Pershing Square said in a statement: "At its current market
value, the Valeant position represented 1.5% to 3% of the various
Pershing Square funds; however, the investment required a
disproportionately large amount of time and resources. As a
result, we elected to sell our investment and realize a large tax
loss which will enable us to dedicate more time to our other
portfolio companies and new investment opportunities."

Ackman is leaving a company burdened with over $30 billion in
debt and facing several federal investigations over its
business practices. Though the market has been absolutely ripping
since the start of the year, Valeant's stock is down about 16%.

Most of that sliding occurred over the past two weeks, during
which Valeant reported earnings. Guidance, according to Wall
Street at least, was weak. And though the company said that it
would be in compliance with all its debt covenants, a week later
it announced that it was looking to refinance. None of this made
investors happy.

Ackman likely isn't happy, either. His fund took a bath in 2015,

losing 20% the year that Valeant started crashing on
accusations of accounting malfeasance and government scrutiny
over its drug pricing.

"We continue to believe that the value of the underlying business
franchises that comprise Valeant are worth multiples of the
current market price," he wrote in a
letter to investors at this time last year.

There are also the Allergan investors who filed a
lawsuit alleging that Ackman's collaboration with Valeant in its
failed bid for Allergan was illegal. Pershing made $2.6
billion deal when a white knight bought Allergan out from under
Valeant, and the firm stands to lose all of that in the event
Valeant and Pershing are found guilty.

Ackman told CNBC's Scott Wapner that his "only mistake with
Valeant [sic] is that 'I should have sold'. Says he
underestimated damage media coverage and falling stock price
would have."

Markets
Insider

Pershing's full statement:

Pershing Square Capital Management, L.P. Announces Sale
of Its Investment In Valeant

Pharmaceuticals International, Inc.

New York, 13 March 2017 //‐ Pershing Square Capital Management,
L.P. (“Pershing Square”) announced today that it has sold its
investment in Valeant Pharmaceuticals International, Inc.
(“Valeant”) (ticker: NYSE: VRX). Pershing Square CEO Bill Ackman
and Vice Chairman Steve Fraidin will remain on the Valeant board
until the upcoming annual meeting but will not stand for
re‐election.

At its current market value, the Valeant position represented
1.5% to 3% of the various Pershing Square funds; however, the
investment required a disproportionately large amount of time and
resources. As a result, we elected to sell our investment and
realize a large tax loss which will enable us to dedicate more
time to our other portfolio companies and new investment
opportunities.

After Bill Ackman and Steve Fraidin joined the Valeant board in
March 2016, they worked with their fellow directors to take
important steps to stabilize Valeant and position it for the
future. Those steps included:

Replacing senior management with talented executives,
including CEO Joe Papa, CFO Paul

Refreshing the board of directors with 10 new members;

Returning the company to a current and timely filing schedule
with the SEC;

Receiving appropriate amendments and waivers under applicable
credit agreements;

Announcing a strategy to sell non‐core assets to improve the
company’s balance sheet;

Paying down ~$2.7 billion of net debt with the sale of
non‐core assets and free cash flow generation; and last week,
priced a $3.25 billion bond refinancing and covenant waiver
package which extends maturities and reduces the company’s
exposure to floating interest rates.

CEO Joe Papa and his team have done an excellent job refocusing
and setting a new course for the company. We wish the company and
its extremely hard working, dedicated and loyal employees great
success in the future.

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