Ackman Raises Possibility Valeant May Sell Bausch & Lomb

Valeant CEO’s Calls With Analysts Raise Hackles
  • Activist shareholder says selling part stake could reduce debt
  • Pershing Square is among Valeant's biggest shareholders

Billionaire activist investor Bill Ackman raised the possibility Tuesday that under-pressure drugmaker Valeant Pharmaceuticals International Inc. could consider selling part of its Bausch & Lomb eye-care business to reduce debt.

“Bausch & Lomb is a very valuable standalone business and some day -- if Valeant chose to -- they could sell a piece of that to pay down their debt,” Ackman said at the Harbor Investment event in New York. Valeant has a “portfolio of very valuable products,” not reflected in its current share price, he said.

Ackman’s Pershing Square Capital Management owns about 6.3 percent of Valeant’s stock, and is the Laval, Quebec-based company’s third-biggest shareholder, according to a regulatory filing last month. The investor has also been one of Valeant’s biggest boosters as the stock has dropped over the last six months.

Ackman said Tuesday that in the coming weeks “a lot of the uncertainties are going to lift” surrounding Valeant as it releases its delayed earnings and annual report, and as management turmoil eases.

“Either management will restore confidence in the reputation of the company with the public and the investment community or they won’t,” Ackman said in response to a question from a member of the conference audience. “If they can’t then one of two things will happen -- new management will be bought in or the business will be sold.”

Valeant is the middle of a tumultuous period. This month, it pulled its financial guidance and delayed providing fourth-quarter results, saying it will wait to file until the board committee’s investigation of a mail-order pharmacy it has used was completed. Valeant also disclosed that it was subpoenaed last year by the U.S. Securities and Exchange Commission.

The company said Wednesday it will add three new board members -- including Stephen Fraidin, vice chairman at Pershing Square Capital Management -- and expand the panel to 14 directors from 12.

Valeant bought eye-care company Bausch & Lomb in 2013 for $8.7 billion, in the middle of an acquisition spree that also saw it snap up Medicis Pharmaceutical Corp. and Salix Pharmaceuticals Ltd.

New York-based Pershing Square typically buys large stakes in a handful of big companies it views as trading below intrinsic value, and agitates executives and directors to make changes to boost shareholder returns. In October 2014, a public fund called Pershing Square Holdings Ltd. began trading in Amsterdam with the same portfolio as the hedge fund.

(In an earlier version of this story, the location of Valeant’s headquarters was corrected.)

(Updates with Valeant board changes in seventh paragraph.)
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