Valeant seeks new CEO and adds activist investor Bill Ackman to board
Valeant Pharmaceuticals’ current chief executive, J. Michael Pearson, is to stay until his replacement has been appointed.
Embattled drug company Valeant Pharmaceuticals is shaking up its leadership by looking for a new chief executive and adding activist investor Bill Ackman to its board of directors.
U.S.-traded shares of the Canadian company soared as much as 16% in Monday morning trading.
Valeant said that current CEO J. Michael Pearson will stay until his replacement has been appointed. Pearson just returned from a two-month medical leave. The company did not specify whether Pearson is resigning or if he had been asked to leave.
A statement from the company did say that Valeant’s board has asked director Howard Schiller to tender his resignation, but Schiller has not done so. Schiller is the company’s former chief financial officer, and he served as interim CEO during Pearson’s medical leave.
Valeant’s stock soared last year as it carried out its strategy of growing mainly by buying older drugs and raising their prices. But the company has been swamped in recent months with a host of problems including massive debt, three ongoing federal investigations of its accounting and pricing practices, and shareholder lawsuits in the U.S. and Canada.
Pearson told investors earlier this month that Valeant won’t be able to file its annual financial report with the Securities and Exchange Commission until sometime in April at the earliest because of an internal probe of its 2014 financial reporting.
He also said Valeant is in confidential discussions with partners on selling some noncore assets and hopes to use that and other money this year to pay off $1.7 billion of its debt, accumulated from a spree of acquisitions in recent years.
Valeant Chairman Robert Ingram said Monday in a statement that although Valeant has gone through some difficult months, he is “confident that the company will be able to rebuild its reputation and thrive under new leadership.”
Valeant Pharmaceuticals International Inc. also said Ackman is joining its board immediately. His Pershing Square Capital Management holds a 9% stake in the drug company and already has another executive, Stephen Fraidin, on Valeant’s board.
Ackman had recently sent his hedge fund investors a note stating that Pershing will “take a much more proactive role at the company to protect” its investment.
Valeant shares were up 8.4% to $29.24 shortly before 10 a.m. PDT Monday. Earlier in the day, they were trading as high as $31.42. That’s still a fraction of the all-time high price of $263.81 that the stock reached last August.
