Ackman: Valeant Could Name New CEO Sooner and Restore Value

Bill Ackman

Bill AckmanThe stock price of Valeant Pharmaceuticals (NYSE:VRX) (TSE:VRX) soared more than 18% to $44.77 per share after Bill Ackman said the pharmaceutical company could name a new CEO in a matter of weeks.

Ackman serves as a board member of Valeant Pharmaceuticals and CEO of Pershing Square Capital Management, one of the largest investors of the pharmaceutical company.

During a conference call with Pershing Square Capital’s investors on Wednesday, Ackman said, “We’re cautiously optimistic it’s a matter of weeks and not months in terms of identifying new management for the company.”

“There is not a list for 100 candidates for the job, there’s probably a handful of top candidates. Because of all the M&A activity in pharma, there are lots of candidates who are available and there are also people in other businesses that find this opportunity extremely attractive,” added Ackman

Last month, Valeant announced Board changes including the resignation of its CEO Michael Pearson, who agreed to continue to serve the company until his successor is appointed. He also made a commitment to “ensure a smooth transition to a new leadership.”

The Canadian pharmaceutical company revamped its leadership amid controversies, which prompted Ackman to join its Board and take a more active role to maneuver and stabilize it.

The stock price of Valeant dropped 90% from its highest level in August to concerns regarding its drug pricing practices, government investigations, and lower earnings forecast for 2016.

According to Ackman, “The best time to be CEO is when expectations are extremely low and the starting valuation is extremely low and Valeant certainly offers that.”

Ackman is optimistic to recoup losses

Ackman expressed optimism that Valeant’s new leadership could restore the company’s value and Pershing Square Capital could recover losses from its investment in the company.

“Our view is we can restore value here very, very quickly. We should be able to recover the lion’s share of our investment — if not all of it — over time,” said Ackman.

The activist investor also acknowledged that his reputation is at stake. According to him, “Restoring shareholders’ confidence in Valeant will “add enormously to our reputational capital.”

Highest priority

Ackman said their highest priority at Valeant is to file the company’s delayed Form 10K annual report.

He believes that they can build investors’ confidence on Valeant once they address each of the issues confronting the company, and “ultimately cause the stock price to reflect the value of its underlying assets or the intrinsic value of the business.”

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One Thought to “Ackman: Valeant Could Name New CEO Sooner and Restore Value”

  1. […] optimism that he would recoup losses from investment in the Canadian pharmaceutical company. He was confident that a new leadership could restore Valeant’s […]

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