Valeant shares plunge another 10% to all-time low after Ackman sells stake

Canadian drug maker Valeant Pharmaceuticals plunged to another all-time low on Tuesday after billionaire investor Bill Ackman abandoned his multi-year quest to turn around the company by selling off his entire stake, writing off almost $4 billion in the process.

The stock dropped about 10 per cent onTuesday asinvestors got a chance to digest theAckmannews. The stock dropped $1.62 to $14.59in Toronto, and by $1.22 to $10.89 US on the NYSE.

Ackman, who heads up hedge fund PershingSquare, has made a career out ofidentifying underperforming companies, buying up enough shares to get himself a seat on their board and then pushing for changes. He took aim at the Montreal-based drug maker in 2014 by urging it to buy rival drug company Allergan, the maker of botox.

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As he has done with other companies, Ackman bought in early and rose the stock to huge gains.

Valeant was formed out of the ashes of Biovailin 2010, but quickly outgrew its small beginningthrough aggressive acquisitions under then CEO Michael Pearson, fuelled bycheap debt.

At one point in 2015, Valeant was the most valuable company in Canada, worth more than any oil company or big bank.

But that was before short seller Andrew Left of Citron Research calling the company'saccounting a fraud.

• Valeant shares are 'toxic' short seller claims

At the same time, the company wasswept up in the hysteria over drug prices, which became a major issue in the recent U.S. presidential election.

The stock, which was worth more than $260US a share at its peak, began to crumble as the company couldn't come up with satisfying answers to explain growing questions about its financial numbers. The stock began a freefalland has yet to fully recover.

• Valeant vows to reorganize and return to glory

But Ackman remained a believer throughout the ordeal, so maintained his firm's position in the company all the way down, and was soon named to its board of directors.

On Monday, Pershing announced in a press release that it had sold its entire stake in the company, and announced Ackman would not stand for re-election to the company's board when his term expires.

"We wish the company and its extremely hard-working, dedicated and loyal employees great success in the future," Pershing said.

Regulatory filings suggest Pershing owned at least 18 million shares in Valeant, and paid an average of $166 US a share for them on the NYSE over the years. That suggests the fund lost at least $2.7 billion US, all told roughly $3.6 billion Cdn.