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CNBC Exclusive: CNBC Excerpts: Pershing Square Capital Management Founder & CEO Bill Ackman Speaks with CNBC's "Squawk Box" Today


WHEN: Today, Monday, June 9th

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Bill Ackman, Pershing Square Capital Management Founder & CEO on "Squawk Box" today. Video from the interview is available on

All references must be sourced to CNBC.


What he's done is he's built a business that looks a lot more like Colgate or Proctor and Gamble than your typical pharmaceutical company. Now has he made a large number of acquisitions? The answer is yes. Now why has he made acquisitions that make sense? The answer is unlike pretty much every other company in the pharmaceutical space, he runs a very low cost – zero based budging model.


If you have a competitive advantage in terms of your ability to operate at very low cost and you're operating in an industry where everyone else is operating with very, very high costs, you can make a large number of acquisitions that are very economically attractive and you can create enormous shareholder value and that's what Valeant has done. Since Pearson's been CEO, if you bought the stock and reinvested every dollar of dividends the company has paid over time, you made 26 times your money.


I picked up the phone, I called Jim. Said Jim I'd love to understand your thesis, we are taking a look at Valeant. Of course I didn't tell him that we were looking at a potential transaction, but I asked him for his thoughts. He sent me his 26-page analysis of the company. I went through every word in that document. I had access to inside information on Valeant and unfortunately, Jim does not have Valeant right. Jim has never been a fan of serial acquirers.


If you look at the 85% of the business that's kind of a growth part of the business, that grows at 7, 8% per annum, without huge investment in R&D. The other 15% is a business that's patent cliff business. When the drugs go off patent, it goes to zero. But it's still an attractive place to put your money. It's kind of like a company – you would never value a company on the basis – if you have 85% growing at 10% and 15% shrinking at 30%, you don't put a multiple on the business on the basis on the consolidated revenues. You look at this as two pieces of a business.


Allergan spends over a billion dollars a year on R&D. About 80% of that's unproductive. This is not a company that has developed a lot of drugs. It's just not. It is a company that does what Valeant has does. It has taken Botox, which they acquired – by the way they didn't create Botox, they acquired it from another company. Doctors started to use it to kind of off-label and all of a sudden they were getting rid of wrinkles and they went and got FDA approval to use it to remove wrinkles in your brow and then they found other uses for it. Those kind of finding alternative therapeutic uses, extending the life of the product, that is very cost effective R&D. But the drug discovery R&D that's being done today is not being done effectively at big pharmaceutical companies.


So when investors are allowed to trade on their own information, an investor is allowed to trade on information that he or she receives from a person who is not violating a duty in sharing that information with them. So Valeant concluded that it would be helpful to them to get this transaction done that they'd been trying to do for 18 months if we teamed up with them and put up the capital to buy a large stake in the company. And we formed a partnership to do that. Everyone as far as I can tell understands that this is legal.


I think the government is going to start arresting people. That is what I think is going to happen. We have a website called, we profile 15 of the top 50 distributors. These people are committing mail fraud, wire fraud, all kinds of crimes. Why is the department of Justice involved? Why has the FBI launched a criminal investigation of the company? If I were the government, I'd go after the top distributors first and if I'm a top distributor I turn on the company in exchange for leniency.

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