Monday saw a verbal battle of the billionaires between Bill Ackman and Warren Buffett. Their point of contention? Whether Valeant ($VRX) is a “sewer.”
The two took opposite stances on the embattled drugmaker in back-to-back interviews on CNBC, with Buffet slamming the Canadian company for its controversial price hikes and Ackman singing its praises.
“I don’t think you’d want your son to grow up and run a company in the manner that Valeant was run,” Berkshire Hathaway’s ($BRK) head honcho told CNBC’s “Squawk Box.” He also pinned responsibility for the company’s demise on dismissed CEO J. Michael Pearson, remarking that he would have been “amazed” if Valeant’s pricing strategy hadn’t “come from the top.”
“He certainly seemed like the sort of person who forged all important policies on the company,” Buffett said.
It’s not the first time the Berkshire team has taken aim at Valeant and Pearson, who the company announced last week would be replaced with former Perrigo ($PRGO) skipper Joseph Papa. The company’s vice chairman, Charlie Munger, touched off Monday’s spat on Saturday by calling Valeant a “sewer” and saying its creators got what they had coming to them.
But Ackman–a longtime Valeant investor and brand-new board member at the Quebec-based pharma–disagreed, saying it was “wrong to indict an entire company.”
“You don’t call a company a sewer because a company made a mistake,” he told CNBC’s “Fast Money: Halftime Report.”
The way he sees it, Valeant has made “appropriate changes in personnel”–including replacing Pearson with Papa and enacting sweeping changes to its slate of directors.
Ackman’s comments helped Valeant’s stock partially recover from a Monday slide, though shares are still bottom-feeding after congressional pricing scrutiny, channel-stuffing allegations, bankruptcy worries and a slew of other hurdles cost them more than 85% of their value since they peaked last August.
But after a week including the CEO announcement, board changes and filing of its overdue annual report–the tardy status of which had sparked a risk of defaulting on its debt–the company believes it’s back on the right track.
“I am pleased that Valeant is making good progress toward restoring the public’s confidence and that the company has hired a great leader with an impressive track record of achievements and an impeccable reputation,” Chairman Robert Ingram said in a Friday statement. “We are excited for Valeant’s next chapter and believe that the board is well-equipped to oversee a successful turnaround under Joe Papa’s leadership.”
by Carly Helfand | May 3, 2016