Ackman Sells Entire Stake In Valeant Pharmaceuticals Intl, Inc. – Stock Plunges

Written by BNN.ca

Billionaire investor William Ackman walked away from Valeant Pharmaceuticals Intl Inc. (NYSE: VRX) on Monday, with a roughly $3 billion loss after he sold his entire stake in the ailing drug company despite trying to rescue it for some 18 months.

Ackman’s Pershing Square Capital Management disclosed the exit in a press release after markets closed. The New York-based fund said its position accounted for up to three per cent of Pershing’s funds, but the company “required a disproportionately large amount of time and resources.” 

Pershing also announced Ackman and Vice-Chair Steve Fraidin would step down from Valeant’s board of directors after its annual general meeting. 

Valeant’s New York-listed stock was down 10 per cent in after-hours trading at 5pm ET.

“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 said in a statement. “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.”

Pershing Square became one of the firm’s biggest investors in 2015 when it sunk some $3.2 billion into the company. Ackman bought into Valeant when the stock was trading near $190 a share and he watched it surge to $260 a share during the summer of 2015 but governmental scrutiny of the company’s pricing policies coupled with scandals surrounding Valeant’s specialty pharmacy unit, Philidor, caused the stock price to sharply tumble after August 2015.

Now Ackman walks away with about $221 million, having sold his entire stake of 18.1 million shares after months of turmoil that have left his fund with two years of double-digit losses and a tarnished reputation.

During his one year on the board, Ackman replaced Valeant’s CEO, refreshed the board with 10 new directors and worked to pay down some $2.7 billion in debt through the sale of non-core assets. Still, the company’s stock price kept sinking despite hopes that a merger deal might be around the corner.