Valeant Pharmaceuticals tanks as Bill Ackman dumps stake

Shares in Valeant Pharmaceuticals tanked on Tuesday after billionaire hedge fund manager Bill Ackman's Pershing Capital Management sold its 10% stake in the company.

Pershing Square chief executive Bill Ackman and vice chairman Steve Fraidin will remain on the Valeant board until the upcoming annual meeting but will not stand for re-election.

"At its current market value, the Valeant position represented 1.5% to 3% of the various Pershing Square funds; however, the investment required a disproportionately large amount of time and resources.

"As a result, we elected to sell our investment and realise a large tax loss which will enable us to dedicate more time to our other portfolio companies and new investment opportunities."

Valeant, which manufactures and markets a broad range of branded and generic pharmaceuticals, over-the-counter products and medical devices, has been the subject of a number of federal investigations.

Shares in the company tumbled last month as it posted a 7% drop in full-year sales and downgraded its revenue outlook for 2017.

Valeant said it was expecting revenues of $8.9bn to $9.1bn, down from at least $9.55 guided to in November last year.

At 1405 GMT, the shares were down 10% to $10.90.