Ackman backs Valeant CEO as shares tumble to 2-1/2 year lows

Thu Nov 5, 2015 5:17pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Svea Herbst-Bayliss and Caroline Humer

BOSTON/NEW YORK (Reuters) - Billionaire investor Bill Ackman expressed confidence in Valeant Pharmaceuticals International Inc's chief executive on Thursday as shares in the drugmaker fell as much as 20 percent to their lowest level since 2013 on concerns over its business practices.

Valeant (VRX.TO: Quote)(VRX.N: Quote) CEO Michael Pearson has come under increasing pressure as the company's stock plunged from $263.70 on Aug. 5 to below $80 on Thursday on scrutiny over high price markups for its drugs and accusations it used a specialty pharmacy, Philidor Rx Services, to inflate revenue.

Valeant has denied the allegations, but has not allayed investor concerns as new reports surface of questionable billing practices at Philidor.

One trigger for Thursday's selling was a Wall Street Journal report that Ackman had told a Valeant board member that Pearson may have to go. Later in the day, Ackman expressed confidence in the CEO's leadership and willingness to take steps in the best interest of investors.

"You are one of the most shareholder-oriented CEOs I know," Ackman wrote to Pearson in an email seen by Reuters. "You have assured me that you and the rest of the board are considering any and all alternatives that would benefit shareholders and other stakeholders."

Ackman's Pershing Square Capital Management and its investors have lost roughly $2.3 billion since taking a 6 percent stake in Valeant early in the year. The size of Ackman's fund has shrunk to roughly $14.5 billion from $20 billion earlier in the year as Valeant, his biggest bet, has soured.

A Valeant spokeswoman said Pearson retained the full confidence of the company's board of directors. "Mike remains focused on running the business and has been meeting with physicians, partners and other stakeholders," Laurie Little said.

The comments did not halt the slide in U.S.-traded shares, which closed down 14.4 percent to $78.77 after hitting a bottom of $73.37 earlier in the session, the lowest since May 2013.   Continued...

The ticker information for Valeant Pharmaceuticals International Inc. is displayed on a screen above the post where it's traded on the floor of the New York Stock Exchange November 4, 2015. REUTERS/Brendan McDermid