Earlier this week, the U.S. Senate's committee on aging released more than 800 pages of documents in connection with its investigation into pricing practices at Valeant Pharmaceuticals International Inc.
The trove of exhibits includes correspondence between Bill Ackman, the high-profile hedge fund manager who took a large stake in the firm, and Michael Pearson, its former chief executive. Their e-mails reveal an effort by Mr. Ackman to tamp down criticism of the drug maker and an increasingly desperate attempt to influence how the company's management responded to a growing crisis.
A representative for Mr. Ackman declined to comment on the correspondence.
Reaching out to an influential critic
In April, 2015, about a month after taking a significant stake in Valeant, Mr. Ackman tries to broker a truce between Charlie Munger, Warren Buffett's business partner, and Mr. Pearson. In March, Mr. Munger had launched a blistering public attack on Valeant, saying it reminded him of ITT, a high-flying 1960s conglomerate that gorged on debt while relying on accounting tricks. "It wasn't moral the first time. And the second time it's not better," Mr. Munger said.
Trying to stem huge losses
On Oct. 21, 2015, Valeant's shares crater after a short seller accuses the company of falsely inflating its sales. Mr. Ackman and Valeant scramble to do damage control; the next day, Mr. Ackman urges prompt and open communication with investors, saying "every minute that you wait before sending out a press release, another shareholder capitulates on Valeant and doesn't come back."
Reaping the whirlwind
On Oct. 27, 2015, Mr. Ackman issues multiple warnings that the company is on the brink of disaster. The first comes at 1:44 a.m., in an e-mail to Mr. Pearson. The second takes the form of a lengthy e-mail at 6:30 a.m. that he requests be distributed to Valeant board members and senior management. "The clock is ticking," Mr. Ackman writes. "We are on the brink of a catastrophe that will dramatically affect the lives of everyone involved in a negative way."
Mitigating damage
As Valeant founders, Mr. Ackman repeatedly suggests ways for the company to deliver positive news and reassure investors. In November, he proposes selling Valeant's dermatology business and advises Mr. Pearson on the tactics of such a sale.
Grappling with uncertainty
In February of this year, Valeant delays the filing of its annual report in a further blow to investors. Mr. Ackman complains to Howard Schiller – the interim chief executive while Mr. Pearson is on medical leave – that Valeant shareholders are once again "in an information vacuum."