Bill Ackman, the founder of Pershing Square, sold his investment and is leaving Valeant Pharmaceuticals. He will reportedly step down from the board until its upcoming election.
In a statement, Pershing Square said the Valeant position, at its current market value, represented 1.5 percent to 3 percent of its various funds. But the investment needed a “disproportionately large amount” of time and resources.
“As a result, we elected to sell our investment and realise a large tax loss which will enable us to dedicate more time to our other portfolio companies and new investment opportunities,” the statement reads. Pershing Square announced in a press release that Vice-Chair Steve Fraidin will also step down from Valeant's board of directors.
Ackman confirmed through CNBC that he opted to sell his stake for it will not "move the needle for Pershing Square, even if the stock doubled from here."The billionaire hedge fund manager allegedly sold his 27.2 million shares at around US$11 (AU$14) each.
Ackman's Pershing Square Capital Management brought Valeant at an average cost of US$196 (AU$259) per share in 2015. 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.
Issues related to the company's pricing policies and scandals surrounding Valeant's specialty pharmacy unit, Philidor, caused the stock price to fall after August 2015. In November, charges were announced for a former Valeant executive and a former CEO of Philidor.
"Their alleged kickback scheme illegally converted Valeant shareholder money into their own personal nest eggs. As alleged, while purporting to be arms-length business counterparts, the two men were, in fact, partners in crime," Preet Bharara, former US attorney for the district, said.
While he was on the board, Ackman became Valeant's CEO and appointed 10 new directors. However, the company’s stock price kept falling. "We made one very big mistake taking a passive position in Valeant,” he told CNBC last year.
Valeant CEO Joe Papa said they accept Ackman's decision. “We appreciate the support and guidance that Bill and Steve provided during a challenging time. Serving on the board of a company undergoing a transformation requires a significant commitment and we accept their decision not to stand for re-election,” Papa said in an emailed statement shared by Bloomberg.
Pershing Square also invests with General Growth Properties Inc. and Restaurant Brands International Inc. It became one of Valeant's biggest investors in 2015.