Shares in Valeant Pharmaceuticals fall after Pershing Square sells off all stock

Shares in Valeant

Pharmaceuticals fall after Pershing Square sells off all stock

MONTREAL — Shares of Valeant Pharmaceuticals hit a seven-year low Tuesday after one of its largest investors sold off all remaining stock in the Laval, Que.-based drugmaker, the latest knock to what was once one of Canada’s most valuable companies.

Valeant shares (TSX:VRX) hit $14.15 in early trading on the Toronto Stock Exchange. That was down nearly 13 per cent from Monday’s close and the lowest level since January 2009. They partially recovered in later trading at $14.47, down $1.74 or 10.76 per cent.

Pershing Square Capital Management announced Monday that it had sold its final stake in Valeant for a large tax loss. At one time, the New York-based firm headed by CEO Bill Ackman had been the largest single shareholder in Valeant and one of its most vocal defenders.

Ackman had once viewed Valeant as an undervalued company that would eventually overcome its problems, which included a scandal over its drug pricing strategy and revelations about its ties with a U.S. mail-order pharmacy that has since been shut down.

Last April, Ackman testified before a U.S. Senate committee about Valeant’s much-maligned strategy of buying niche drugs and raising their prices by as much as 3,000 per cent.

The prominent activist investor, who often challenges boards of the companies in the Pershing Square portfolio, promised to use his influence as a Valeant director to try to revamp its pricing strategy.

Gary Nachman of BMO Capital Markets and Neil Maruoka of Canaccord Genuity slashed their outlooks for Valeant’s shares by more than 20 per cent on Pershing’s move.

“Considering all of Pershing’s efforts to create a turnaround situation with the new management team, we believe this ‘throwing in the towel’ at these levels sends a poor signal regarding the road ahead for Valeant,” Nachman wrote in a report.

While the sale of Pershing’s investment doesn’t affect Valeant’s operations, Nachman said it comes as the company is just beginning to implement strategic initiatives including asset sales to pay down debt.

“We still think it’s hard to interpret Pershing’s decision at this time as anything but a realization that this turnaround situation may end up taking a lot more time and perhaps have greater challenges than originally anticipated.”

Vicki Bryan, an analyst with corporate bond research company Gimme Credit, said Pershing abandoned what had been a nearly US$5-billion investment in Valeant after receiving about US$220 million from selling its final stake.

Ackman and vice-chairman Steve Fraidin will remain on the company’s board until their replacements are elected at the May 2 annual meeting.

Just Posted

Red Deer photographer captures rare spirit bears

As part of a Canada 150 project he toured some parts of Canada

Updated: Man shot dead by police near Alix, ASIRT investigating

The Alberta Serious Incident Response Team (ASIRT) is investigating after a man… Continue reading

Flu clinic opens on Monday at Westerner Park

Free vaccine to all Albertans six months of age and older

Number of changes to Central Alberta constituencies recommended

Several Central Alberta ridings will have a new look if the Alberta… Continue reading

#MeToo campaign spreads to Red Deer

CASASC continues campaign

Business of the Year Awards celebrate local achievement

Olymel, The Bra Lounge, 360 Fitness and Postma Electrical Services Ltd. are the winners this year

Sockey Night at Saturday’s Rebels game

United Way Central Alberta is determined to provide warm feet for all… Continue reading

Canadian planet hunter seeking alien life

‘The shifting line of what is crazy’ says Toronto-born astrophysicist

All three victims identified in Fernie arena ammonia leak

Wayne Hornquist and Lloyd Smith were from Fernie and Jason Podloski from Turner Valley, Alta

4 B.C. prisons install body scanners to combat drug smuggling

The scanners are aimed to combat the smuggling of contraband including weapons and drugs

Owner of medical marijuana dispensaries challenges constitutionality of law

The law under which the owner of two medical marijuana dispensaries was… Continue reading

Victim in fatal ammonia leak remembered for his passion and smile

Friends and colleagues remember Lloyd Smith as someone who was always willing to help people

Watch: Gravel truck turns into wrong off-ramp at Highway 2 Ponoka

The new Highway 2 and Highway 53 intersection at Ponoka caused some confusion for one driver

Updated: Central Alberta Election Results

Unofficial results from Monday’s municipal elections in Central Alberta. Not all results… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month