WHEN: Today, Wednesday, January 7th
WHERE: CNBC's "Squawk Box"
Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Pershing Square Capital Management Founder & CEO Bill Ackman on CNBC's "Squawk Box" today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000344479, http://video.cnbc.com/gallery/?video=3000344469, http://video.cnbc.com/gallery/?video=3000344490 , and http://video.cnbc.com/gallery/?video=3000344531.
All references must be sourced to CNBC.
ACKMAN ON VALEANT/ALLERGAN DEAL MISTAKE
WE MADE ONE MISTAKE. MISTAKE WE MADE WAS THREE MONTHS, FOUR MONTHS AFTER ANNOUNCING THE TRANSACTION, I DON'T REMEMBER THE EXACT TIME FRAME, THE ARBS CAME TO US AND SAID, LOOK – AND WE WERE LIKE WHAT CAN WE DO TO INCREASE THE PROBABILITY OF THE DEAL? WHAT CAN WE DO TO GET YOU GUYS MORE INVOLVED? – AND THEY SAID LOOK, LAUNCH A TENDER OFFER. AND YOU KNOW, THERE ARE ALL KINDS OF COMPLICATED TENDER OFFER RULES, BUT THEY BASICALLY SAY YOU CAN'T BUY STOCK IN FRONT OF A TENDER OFFER IF YOU HAVE TAKEN SORT OF SUBSTANTIAL STEPS TOWARD TAKING THE TENDER OFFER OR YOU'RE AT LEAST NOT A CO-BIDDER IN THE TRANSACTION. SO WE HADN'T TAKEN ANY STEPS TOWARDS A TENDER OFFER. THE LAWYERS REVIEWED ALL OF OUR E-MAILS, THE BOARD MINUTES, EVERYTHING TO MAKE SURE THERE WASN'T SOMETHING THEY DIDN'T KNOW ABOUT. AND THEY SAID YOU'RE FINE, GO AHEAD. LAUNCH A TENDER OFFER. WHAT WE UNDERESTIMATED, WHAT WE FORGOT ABOUT WAS THE OTHER SIDE CAN SUE US, CAN SMEAR US IN THE PRESS, CAN USE THIS AS A, REALLY, A PR STUNT TO MAKE US LOOK BAD.
ACKMAN ON JCPENNEY
UNFORTUNATELY, JCPENNEY WAS A DYING COMPANY AT THE TIME WE INVESTED IN THE COMPANY. AND UNFORTUNATELY TODAY, CONTINUES TO BE A DYING COMPANY. AND WE BROUGHT IN WHAT WE BELIEVED TO BE THE BEST CEO IN THE COUNTRY IN RETAIL TO REIMAGINE – YOU KNOW, CHANGE THE BUSINESS – EXECUTION WAS NOT WHAT IT NEEDED TO BE. IT DIDN'T WORK. THAT CAN HAPPEN. BUT ULTIMATELY, NONE OF THESE CHANGES HAPPEN UNLESS THE MAJORITY OF THE SHAREHOLDERS SUPPORT OUR INITIATIVE.
ACKMAN ON ACTIVIST ALTERNATIVE
WHAT AN ACTIVIST INVESTOR DOES IS GIVE SHAREHOLDERS AN ALTERNATIVE THAT THEY CAN VOTE UPON. IF THEY DON'T LIKE US OR THEY DON'T LIKE OUR DIRECTORS, OR THEY DON'T LIKE OUR CEO CANDIDATE, WE HAVE TO FOLD THE TENT AND GO HOME.
ACKMAN ON JCPENNEY 2
I WANT JCPENNEY TO BE SUCCESSFUL. I JUST THINK THEY ARE IN A VERY, VERY TOUGH SPOT IN THE MARKET. AND I THINK, YOU KNOW, THEY WENT BACK TO THEIR OLD MODEL, WHICH, IN OUR VIEW, IS NOT A SUSTAINABLE MODEL IN THE INTERNET RETAIL WORLD. THEY DON'T REALLY SELL MUCH – IT'S REALLY COMMODITY GOODS, HIGHLY DISCOUNTED, AND I JUST THINK THE CONSUMER HAS SORT OF BECOME SMARTER THAN THAT COUPON. THAT PROGRAM.
ACKMAN ON BLACKROCK
BLACKROCK IS A PERMANENT SHAREHOLDER, AND THEY ARE NOT GOING TO VOTE IN FAVOR OF SOMETHING THAT CREATES VALUE TOMORROW, BUT DESTROYS VALUE, YOU KNOW, A YEAR LATER OR FIVE YEARS LATER. RIGHT? SO THE GOVERNOR ON ACTIVISM IS THE SHAREHOLDER BASE. AND AS A RESULT, YOU KNOW, YOU'RE NOT GOING TO SEE A LOT OF BUSINESSES BE DESTROYED, UNLESS ALL THE SUDDEN INDEX FUNDS DECIDE TO TRY TO LIQUIDATE COMPANIES.
ACKMAN ON HERBALIFE
WHEN YOU SHINE SUNLIGHT – YOU KNOW, SHINE SUNLIGHT ON MADOFF, IT MAKES IT DIFFICULT FOR MADOFF TO FIND NEW VICTIMS. SAME THING IS HAPPENING AT HERBALIFE. THEIR RECRUITMENT IS DROPPING SIGNIFICANTLY, WE ARE GETTING CALLS FROM DISTRIBUTORS SAYING MY CHECKS ARE DECLINING, I WANT TO GET OFF THIS TRAIN. HOW DO I BECOME A WHISTLE BLOWER? RIGHT? IMAGINE YOU'RE AN HERBALIFE EMPLOYEE. YOUR OPTIONS ARE NOW WORTHLESS, OK? YOU KNOW YOU ARE WORKING FOR A PYRAMID SCHEME. YOUR CHANCES OF GOING TO JAIL IF YOU STAY AT THE COMPANY AND KEEP WORKING FOR THE COMPANY HAVE INCREASED MEANINGFULLY, ASSUMING YOU'RE LIKE A SENIOR EXECUTIVE. OR YOU CAN GO TO THE GOVERNMENT, BE A WHISTLE BLOWER AND MAKE A WHISTLE BLOWER RECOVERY WHICH COULD BE $10, 20, 30, 50 MILLION DOLLARS. RIGHT? SO YOU HAVE A FLIGHT OF TOP DISTRIBUTORS, SENIOR EMPLOYEES FROM AROUND THE WORLD CONTACTING US, CONTACTING THE GOVERNMENT, SHARING INFORMATION, RIGHT? THAT'S, YOU KNOW, THAT'S A PROBLEM.
ACKMAN ON FIDELITY OWNING HERBALIFE
WHAT'S FIDELITY'S ARGUMENT FOR OWNING IT, RIGHT? THERE'S NO UPSIDE ANYMORE BECAUSE FUNDS ARE DETERIORATING, GUIDANCE IS DECLINING. YOU HAVE DOJ, FBI, AG INVESTIGATIONS, SEC HAS BEEN AT THIS FOR TWO YEARS. I MEAN, ANOTHER QUESTION YOU SHOULD ASK IS AT WHAT POINT IN TIME – YOU KNOW, THE GOVERNMENT HERE HAS NOT DONE A LOT – HAS NOT DONE ANYTHING TO PROTECT THE VICTIMS.
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