ValueAct rallies Valeant investors as company fends off attack-source

Tue Oct 27, 2015 4:53pm EDT
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By Michael Flaherty

Oct 27 (Reuters) - Activist firm ValueAct is meeting with other large investors in Valeant Pharmaceuticals International , as the company aims to rally support amid allegations of improper accounting and aggressive pricing.

Mason Morfit, a partner at ValueAct, rejoined the board of Valeant on Monday and shortly afterwards started meeting with representatives from the company's top ten investors, a person familiar with the matter said on Tuesday.

Valeant shares have plunged more than 50 percent since their August peak after U.S. Democratic politicians took aim at the company's pricing policies. A federal subpoena followed and then last Wednesday, short-seller Andrew Left issued a report claiming fraud at Valeant, sending shares into a tailspin.

Valeant laid out a detailed defense on Monday of its relationship with specialty pharmacy Philidor - the firm at the center of Left's accusations.

Valeant has said it properly accounts for sales through its pharmacy partners and only books revenue once one of its medicines reaches a patient.

Morfit, who served on Valeant's board from 2007 to 2014, is expected to reiterate that message in his meetings, which may extend to smaller shareholders, said the person, who did not want to be identified because the discussions are confidential.

Valeant's top ten shareholders include Ruane, Cunniff and Goldfarb, T. Rowe Price, Paulson & Co, and Lone Pine Capital.

Morfit stepped down from the board in May 2014, in part because he had just joined the Microsoft Corp board and wanted to dedicate his efforts there, he said at the time. Four months later, ValueAct CEO Jeffrey Ubben joined the Valeant board as deal discussions with Allergan were heating up.   Continued...