Mason Morfit, the chief executive officer of ValueAct Capital resigned as director of the board of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) to be able to reduce the position of the activist hedge in the pharmaceutical company.
Morfit disclosed his decision to relinquish his seat in a letter to the board of directors of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), which was also attached to the amended 13D filing of ValueAct with the Securities and Exchange Commission (SEC).
Morfit wrote that he realized that the period has come—given his new position in the board of Microsoft Corporation (NASDAQ:MSFT) to reallocate his time to other board work after serving the board of directors of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) since 2007. He also emphasized that he believes that the pharmaceutical company is in an “extremely strong position” and he is confident about its future.
In addition, Morfit also indicated the intention of Valeant Capital to reduce its stake in the pharmaceutical company. The activist hedge fund’s position in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is approximately worth $2.5 billion out of its $14 billion assets under management (AUM).
Morfit pointed that ValueAct Capital was not able to buy and sell shares in the pharmaceutical company for a long period because of its strategy. According to him, ValueAct Capital has been restricted from selling any shares in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) since June 2013—the stock price of the company increased from $85 to $135 a share since then.
“By resigning today, with the Allergan transaction in the public domain and with Valeant’s earnings report later this week, this will create an opportunity for ValueAct Capital to sell if we choose (of course depending on stock price) later this year. Serving out the remaining term of my board service, could potentially create additional delays and complications, particularly if Allergan enters into negotiations with Valeant,” wrote Morfit.
Morfit reiterated that ValeeAct Capital is making a portfolio management decision, and it is not about the fundamental business, future performance, or the merits of its transaction with Allergan Inc (NYSE:AGN).
“ValueAct Capital has a practice of reducing portfolio weightings in companies where we no longer serve on the board of directors. We have done this consistently since our inception in 2000,” said Morfit.
ValueAct Capital plans retain $1 billion worth of shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and keep it as its top position.