Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  News  >  Business Leaders  >  All news

Business Leaders

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 
HomeAll newsMost read newsBusiness Leaders Biography 
Birthday : 11/30/1965
Place of birth : New York - USA
Linked companies : Howard Hughes Corp
Biography : Mr. William A. Ackman is Chairman at The Howard Hughes Corp., Chief Executive Officer at Pershing Sq

William Ackman's Pershing Square Sold Stake in Valeant -- Update

share with twitter share with LinkedIn share with facebook
share via e-mail
03/14/2017 | 12:26am CEST
By David Benoit 

William Ackman's Pershing Square Capital Management LP sold its stake in struggling drugmaker Valeant Pharmaceuticals International Inc., taking a roughly $4 billion loss and bringing to a close one of the most tortured sagas in hedge-fund history.

The sale ends Mr. Ackman's quest to rescue the worst bet of his investing career. Valeant, once beloved by investors for its strategy of buying smaller rivals and boosting their drugs' prices, has lost more than 95% of its value in less than two years following questions about its accounting and business practices.

Mr. Ackman once predicted Valeant would be the next Berkshire Hathaway Inc., saying its shares could hit $330. The stock closed Monday at $12.11.

At that price, the 8% stake Mr. Ackman parted with would be worth about $330 million, down from what had once been worth about $5 billion and more than wiping out the roughly $2.2 billion he made by joining with Valeant in 2014 for a hostile attempt to buy the maker of Botox, Allergan Inc.

The Valeant saga illustrates the risks of Mr. Ackman's strategy of placing big bets on only a handful of companies at the same time. While his funds have generated substantial returns over the years, Mr. Ackman has drawn criticism for some high-profile flops. Losses on retailer J.C. Penney Co. and his long-running bet against supplement maker Herbalife Ltd. have offset big gains on Canadian Pacific Railway Ltd. and once-bankrupt mall developer GGP Inc.

The loss of its biggest backer is another hit for Valeant, which is trying to regain investor confidence while contending with a roughly $30 billion debt load and raft of government investigations. The stock dropped 10% in after-hours trading Monday following a CNBC report that Pershing Square had sold its stake.

Valeant didn't immediately respond to a request for comment.

Mr. Ackman sold the stake after concluding that he couldn't recover his losses on the stock, according to people familiar with the matter. The investment, once Pershing Square's largest, had fallen to less than 3% of the firm's portfolio but was taking up considerable time and resources, the fund said.

In a little over a year on the board, Mr. Ackman and Pershing Square Vice Chairman Stephen Fraidin helped replace the majority of Valeant's directors, install a new chief executive and chief financial officer and sell assets. Messrs. Ackman and Fraidin won't stand for re-election at the company's next annual meeting, Pershing Square said in a press release Monday.

While his portfolio has struggled, Mr. Ackman wasn't moving to meet redemptions of investor money with the sale, the people said.

"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," Pershing Square said.

Mr. Ackman's long history with Valeant traces back to early 2014, when he was introduced to then-Chief Executive Michael Pearson. Shortly after, the two men teamed up to make an unusual bid for Allergan. Mr. Ackman bought a large stake in Allergan before he and Valeant disclosed they were trying to buy the company for $46 billion.

Allergan rejected the approach and waged a hostile fight and attacked Valeant's business model, calling the company a "house of cards." Allergan ultimately sold itself to Actavis PLC for $66 billion, upending Valeant's bid but delivering Mr. Ackman and Valeant $2.6 billion in profit on Pershing Square's Allergan stake.

Mr. Ackman then bought a stake in Valeant itself in early 2015, a bet on Mr. Pearson's ability to buy up companies and squeeze profit out of them. The stock kept rising, boosting his portfolio broadly.

By the fall, the company was under siege.

A short seller questioned if Valeant had an accounting issue and brought attention to a little-noticed mail-order pharmacy the company was using to increase sales.

The confidence Wall Street had in the operations quickly evaporated. In early 2016, Mr. Ackman faced a choice of whether to sell or double down amid the concerns. Believing the company still had valuable assets and that the market was missing the true story, he joined the board and bought more stock.

Mr. Pearson was fired, and Joseph Papa of rival drug company Perrigo Co. was named CEO. The stock rallied.

But earnings have failed to materialize and asset sales that have been discussed haven't come through, as Wall Street has turned its attention to Valeant's $30 billion pile of debt. The company doesn't have much debt coming due in the near future.

Valeant is anticipating declines in 2017 revenue and adjusted earnings before interest, taxes, depreciation and amortization compared with last year.

Valeant's cash flow worsened last year, compared with a year earlier, according to Wells Fargo Securities. The company is counting on increasing sales of irritable-bowel drug Xifaxan, for instance, but it faces heavy competition and a patent challenge.

It has tried to sell Xifaxan and other assets but hasn't been able to seal a deal so far. The company last week refinanced billions of dollars of its shorter-term debt, buying more time to right itself.

"Valeant's business appears to be even weaker than we had suspected and the future of the company appears to be in question more than ever," Wells Fargo's David Maris, a Valeant critic, wrote in a research note March 6.

--Michael Rapoport and Jonathan D. Rockoff contributed to this article.

Write to David Benoit at david.benoit@wsj.com

share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news about William Ackman 
03/23 WILLIAM ACKMAN : Ackman's Pershing Square Holdings seeks London listing
03/20DJWILLIAM ACKMAN : William Ackman's Valeant Loss Is Short-Sellers' Gain -- WSJ
03/15DJWILLIAM ACKMAN : Valeant Slides on Ackman's Exit -- WSJ
03/14DJWILLIAM ACKMAN : William Ackman's Pershing Square Sold Stake in Valeant -- Update
01/27 WILLIAM ACKMAN : Ackman's fund mum on names of latest investments
2016 WILLIAM ACKMAN : Chipotle shareholder urges Ackman to recruit new board members
2016 WILLIAM ACKMAN : Ackman's fund asks SEC for exemption after campaign donation
2016DJWILLIAM ACKMAN : Top Equities Stories Of The Day
2016DJWILLIAM ACKMAN : Chipotle, Ackman Near Settlement Over Company's Board
2016 WILLIAM ACKMAN : Ackman
2016 WILLIAM ACKMAN : Activist Ackman calls Chipotle relationship 'extremely constructive'
2016 WILLIAM ACKMAN : Chipotle, Ackman talks intensify with confidentiality agreement
2016 WILLIAM ACKMAN : Chipotle builds team to defend against activist investor Ackman - sources
2016 WILLIAM ACKMAN : Ackman expected to shake up Chipotle leadership, restore burrito brand
2016 WILLIAM ACKMAN : Ackman buys into Chipotle, to talk to management; shares jump
1  2  3  4  5  6  7  8  9  10Next

Most Read News 
03/24DJCHARLES SCHWAB : ProShares No Longer Wants to Pay Charles Schwab to Sell Its ETFs
03/24 RICHIE BOUCHER : Bank of Ireland CEO Boucher to retire before year-end
03/22 HOWARD SCHULTZ : Starbucks CEO Schultz to host last shareholder meeting
03/23DJJOSEPH PAPA : Valeant CEO Joseph Papa Was Paid $62.7 Million in 2016
03/23 WILLIAM ACKMAN : Ackman's Pershing Square Holdings seeks London listing
03/23DJROBERT IGER : Disney Extends CEO Iger's Tenure to 2019
03/28DJDAVID EINHORN : David Einhorn Wants GM to Create Two Classes of Stock
More news

Popular Business Leaders 
William Ackman Alain Afflelou Bernard Arnault Max Azria Mary Barra Yannick Bolloré Warren Buffett Jean-paul Clozel Gary Cohn Tim Cook Leonardo Del Vecchio Michael Dell Jamie Dimon Klaus Engel Bill Gates Carlos Ghosn Stuart Gulliver Peter Hancock David Henry Carl Icahn Anshu Jain Isabelle Kocher Arnaud Lagardère Maurice Lévy Jack Ma Sergio Marchionne Marissa Mayer Lakshmi Mittal Rupert Murdoch Elon Musk Robert Peugeot Ferdinand Piëch Patrick Pouyanné Sumner Redstone Alexandre Ricard Wilbur Ross Charles Schwab Carlos Slim George Soros Rupert Stadler Bernard Tapie Ratan Tata Tidjane Thiam François Villeroy De Galhau Axel Weber Thomas Wilson Martin Winterkorn Dieter Zetsche Mark Zuckerberg
A-Z Business Leaders