Valeant Pharmaceuticals shares slump as Pershing exits

Markets Insider

Valeant shares fell to $11.14 after the market closed in NY, down 8 percent from their closing price.

Prices for the benchmark 10-year Treasury note moved slightly ahead, lowering yields to 2.6% from Monday's 2.62%.

Pershing Square Capital Management has bailed on Valeant Pharmaceuticals International by selling its final stake in the drugmaker for a large tax loss.

The investment in Valeant represented about 1.5 percent to 3 percent of Pershing Square's funds. He could have walked away without a share back in early 2015 after his Valeant-Allergan merger ploy failed. Following the completion of the transaction, the director now directly owns 26,822 shares of the company's stock, valued at approximately $395,088.06.

This wasn't Ackman's first go-around with the company.

Yes, the company is taking steps to reduce its obligations.

Bill Ackman had plenty of chances to dump Valeant. The Stock opened its session at $12.41 and closed at $12.11 by showing decrease of -1.06 percent. Ackman and Fraidin will now vacate their seats on the board. Shares of Valeant are down more than 16% year-to-date.

US stocks are also lower.

Shares of Tilly's dropped 11% after the company reported its fourth-quarter financial results on Monday evening.

Based in Canada, Valeant is a pharmaceutical and medical device company, having a market cap of over $4 billion. Earnings, with 15 analysts believing the company would generate an Average Estimate of $0.91.

Pearson continued on his marathon deal spree, picking up PharmaSwiss, AB Sanitas, Afexa Life Sciences and Sanofi's dermatology unit. This estimate is provided by 12 analysts. And followed it with an even larger deal in 2015 - its $11 billion purchase of Salix Pharmaceuticals.

The sale of his stake ends a sage of almost three years that first saw him team with Valeant in a hostile takeover bid for a rival prior to later making his own investment. The billionaire is supposedly leaving the multinational specialty pharmaceutical company with a loss of over US$3 billion (AU$3.97 billion) after trying to rescue Valeant for some 18 months.

The company sells its skin care brands CeraVe, AcneFree and Ambi to L'Oreal to raise more than $2 billion. Several funds began shorting stock, citing unclear business models and lack of transparency about earnings. Shares of the controversial drug maker nosedived in 2016, falling from a high of $134 each on the Toronto Stock Exchange to a low of $18. During that time, scandal broke.

And it was pressured to hire a new CEO while its executives were repeatedly called to Washington for Congressional hearings to answer for drug price increases. Then, reports surfaced that Valeant was using mail-order pharmacy Philidor to falsely inflate revenues. Overall, Square Capital Management may have lost $2.8 billion just on the Valeant shares as the shares have plunged more than 90 percent from their peak. The decline was directly attributed to Valeant. Thanks to its aggressive method of acquisitions, the company has a massive $30 billion debt burden to contend with.



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