(Adds settlement with R&O Pharmacy)
March 9 (Reuters) - Embattled Valeant Pharmaceuticals (NYSE:VRX)
International Inc VRX.N VRX.TO said on Wednesday it has
added a representative from shareholder Pershing Square (NYSE:SQ) Capital
Management to its board of directors as well as two other new
directors.
Pershing Square, run by activist investor Bill Ackman,
bought a stake in Valeant last year when the drugmaker's shares
were on the rise. They have fallen 68 percent since.
Valeant said later on Wednesday it had jointly ended
litigation with R&O Pharmacy with both sides asking the court to
dismiss case. R&O was not immediately available for comment on
the settlement.
While Valeant did not disclose the terms of the settlement,
it said the resolution included a payment by R&O to Valeant.
R&O sued Valeant in federal court in California on Oct. 6,
after receiving a demand letter from Valeant for more than $69
million, money that R&O said it did not owe.
Valeant later countersued R&O, according to the Wall Street
Journal.
Last fall, the company became the target of two U.S. state
investigations into its drug pricing practices, and its
relationship with Philidor RX Services, a pharmacy selling its
dermatology products, came under scrutiny and was dissolved.
During the last two weeks, the company delayed its annual
financial filing with regulators, postponed a preliminary
earnings announcement, and said it would restate financials.
Chief Executive Officer Michael Pearson (LON:PSON) returned from a
two-month medical leave and a top dermatology executive left. It
also disclosed an investigation by the U.S. Securities and
Exchange Commission.
Stephen Fraidin, a veteran Wall Street lawyer who is vice
chairman at Pershing Square, joined the board, Valeant said. He
previously worked at the Kirkland & Ellis law firm before
joining Pershing last year.
Fred Eshelman, a drug executive who founded Furiex
Pharmaceuticals Inc, and Thomas Ross, an academic who is a
fellow at Duke University and president emeritus of the
University of North Carolina, also joined the board.
Anders Lonner, former CEO of Swedish specialty drug company
Meda AB MEDAa.ST , stepped down from the board, Valeant said.
The board now has 14 members.
Wells Fargo (NYSE:WFC) analyst David Maris, who has an "underperform"
rating on the stock, said in a research note that Pershing
Square had proposed Eshelman for the board at Allergan (NYSE:AGN_pa) during
its and Valeant's failed hostile bid for the company.
Maris said investors will likely have reservations about
Ross as well, given his ties to Duke University, to which CEO
Pearson has donated $45 million.
Valeant plans to report preliminary fourth-quarter earnings
and hold a conference call on March 15.
On Tuesday, Ackman said the company will reveal "messy"
fourth- and first-quarter results, and said Valeant needed to
stabilize soon. If not, new management will be brought in or the
company will be sold, he said.
Valeant's board set up a committee last year to look into
the relationship between Valeant and Philidor. As a result of
that ongoing investigation, it is restating financials. The
committee is advised by Mark Filip, a partner at Kirkland &
Ellis.
On Wednesday, its shares rose 6.6 percent to $67.20.
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BREAKINGVIEWS-Valeant's new directors portend suits and sales
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