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CNBC Transcript: Pershing Square Capital CEO Bill Ackman Speaks with CNBC's Scott Wapner on "Fast Money Halftime Report"

WHEN: Today, Thursday, July 14th

WHERE: CNBC's "Fast Money Halftime Report"

Following is the unofficial transcript of a CNBC interview with Pershing Square Capital CEO Bill Ackman on CNBC's "Fast Money Halftime Report" (M-F, 12PM-1PM ET) today, Thursday, July 14th. Following are links to the interview on CNBC.com:http://video.cnbc.com/gallery/?video=3000534409, http://video.cnbc.com/gallery/?video=3000534413 and http://video.cnbc.com/gallery/?video=3000534421.

All references must be sourced to CNBC.

SCOTT WAPNER: WE WANT TO GET TO THIS NEW STORY FOR US TODAY. BILL ACKMAN'S PERSHING SQUARE RELEASING ANOTHER NEW VIDEO TODAY. THE 18th IN THE LAST 18 BUSINESS DAYS WARNING INVESTORS AND EVERYONE ELSE FOR THAT MATTER ABOUT WHAT HE CALLS THE EVILS OF HERBALIFE A COMPANY MR ACKMAN HAS BEEN SHORTIGN SINCE DECEMBER OF 2012. TODAY VIDEO SHOWS A PITCHMAN GIVING A HARD SALE TO RECRUITE NEW MEMBERS.

EXCERPT FROM THE RECRUITEMENT VIDEO PLAYED

WAPNER: THOSE QUOTES CONTRADICTED WITH FACTS FROM PERSHING SQUARE LIKE THIS ONE SAYING CONTRARY TOTHAT SAID GENTLEMAN'S CLAIMSA LESS THAN 1% OF HERBALIFE DISTRIBUTORS ARE EARNING MORE THAN MINIMUM WAGE FROM THAT COMPANY. 90% OF DISTRIBUTORS QUIT AFTER THEIR FIRST YEAR THAT ACCORDING TO PERSHING SQUARE AND THAT WEBSITE. JOINING US EXCLUSIVELY NOW IS BILL ACKMAN HE IS THE FOUNDER AND CEO OF PERSHING SQUARE CAPITAL MANAGEMENT. BILL WELCOME BACK.

BILL ACKMAN: THANK YOU.

WAPNER: I SAID AT THE TOP 18 VIDEOS IN 18 BUSINESS DAYS. WHAT'S GOING ON. WHY SO MANY?

ACKMAN: WE'RE DIVERSIFYING INTO THE MOVIE PRODUCTION BUSINESS WE THINK IT IS A MUCH MORE PROFITABLE ENTERPRISE. WHAT'S INTERESTING IS IN FEBRUARY OF THIS THIS YEAR IN HERBALIFE'S 10K THEY SAID THEY WERE IN DISCUSSIONS WITH THE FDC ABOUT A POTENTIAL RESOLUTION OF THE INVESTIGATION. AND REALLY OVER THE LAST YEAR THEY'VE BEEN SAYING WELL MAYBE THERE WAS SOME ROGUE DISTRIBUTORS OUT THERE BUT WE'VE REFORMED OUR PRACTICES AND WE'RE BUILDING IT BETTER AND IN MAY THE COMPANY SAID WE'RE IN ADVANCED –HAVE DISCUSSIONS IN ADVANCED STAGES WITH THE FTC ABOUT A POTENTIAL SETTLEMENT EVEN THREW OUT A NUMBER 2OO MILLION DOLLARS AND THERE WAS A LOT OF DISCUSSION ON CNBC AND A NUMBER OF THE ANCHORS WERE TALKING ABOUT A SLAP ON THE WRIST HERBALIFE IF GOING TO MOVE ON AND THE STOCK HAS RUN ON THE POSSIBILITY OF A SETTLEMENT WHERE THEY PAY WHAT LOOKS LIKE A MODEST FINE IN THE CONTEXT OF HERBALIFE'S MARKET CAP AND THEY GO ABOUT THEIR BUSINESS. YOU WOULD HAVE TO ASSUME THAT DURING THIS PERIOD OF NEGOTIATING A SEATTLEMENT WITH THE FTC ASSUMING THAT IS WHAT IS ACTUALLY GOING ON THE COMPANY WOULD BE INCREDIBLY SCRUPULOUS ABOUT MAKING SURE NONE OF ITS DISTRIBUTORS WERE DOING ANYTHING THAT WOULD BE DEEMED INAPPROPRITATE THAT WOULD HARM THEIR ABILITY TO SETTLE WITH THE REGULATORS. IN FACT, EVERY DAY THOUSANDS OF HERBALIFE DISTRIBUTORS GO ON THE WEB TO HOST WEBINARS AND THEY ATTEMPT TO RECRUIT PEOPLE WITH FALSE AND MISLEADING STATEMENTS ABOUT THE POTENTIAL OF HERBALIFE BUSINESS OPPORTUNITIES. THESE PEOPLE THAT GO ONLINE WE FEATURED 18 OF THEM OVER THE LAST 18 BUSINESS DAYS AND YOU CAN EXPECT ANOTHER ONE TOMORROW AND MONDAY AND TUESDAY AND WEDNESDAY. WE HAVE THOUSANDS OF HOURS OF FOOTAGE OF THESE DISTRIBUTORS BILKING OTHER PEOPLE OUT OF THEIR HARD EARNED MONEY.

WAPNER: WHAT ABOUT SOME OF THE CRITICISM THAT I KNOW YOU'VE HEARD YOURSELF THAT YOU USE SELECTIVE EDITING LET'S SAY IN THESE VIDEOS TO TELL YOUR STORY. HOW DO YOU RESPOND TO THAT?

ACKMAN: THERE'S NO SELECTIVE EDITING AT ALL. WE HAVE ALL THE SOURCE MATERIAL. WE PROVIDED IT TO THE GOVERNMENT. THE GOVERNMENT CAN -- IF PEOPLE WOULD WATCH A TWO HOUR LONG WEBINAR WE'D RELEASE THOSE AS WELL AS. THIS IS NOT SELECTIVE. WHAT'S ACTUALLY INTERESTING IS YOU CAN'T FIND ON THE WEB AND THERE ARE THOUSANDS OF THESE VIDEOS ON THE WEB, THERE'S NOT ONE OF A HERBALIFE DISTRIBUTOR TALKING TO HIS RECRUITS ABOUT HOW TO SELL THE PRODUCT, ABOUT HOW TO MAKE A RETAIL SALE OF AN HERBALIFE PRODUCT. IT'S ALL ABOUT HOW TO RECRUIT PEOPLE TO BECOME DISTRIBUTORS BECAUSE THAT'S THE ONLY WAY YOU CAN MAKE MONEY. THE POINT WE'RE MAKING WITH THESE VIDEOS IS THE PROBLEM WITH HERBALIFE THEY HIRED A FORMER FTC COMMISSIONER TO MAKE A SPLASH ABOUT HAVING A REAL COMPLIANCE DEPARTMENT. THE PROBLEM ISN'T THE COMPLIANCE DEPARTMENT AS MUCH OF A JOKE AS THE HERBALIFE COMPLIANCE DEPARTMENT IS THE INCENTIVES OF THE HERBALIFE MARKETING PLAN. THE ONLY WAY YOU CAN MAKE MONEY AT THE COMPANY, AND THAT'S A VERY SMALL FRACTION OF THE PEOPLE INVOLVED HERE, CERTAINLY WELL BELOW 1% OF THE DISTRIBUTORS, IS BY RECRUITING OTHER PEOPLE HEAVILY AND GETTING THEM TO INVEST THOUSANDS AND THOUSANDS OF DOLLARS. THAT'S THE ONLY HOPE YOU HAVE OF MAKING MONEY AND THAT'S BECAUSE OF HOW THE INCENTIVES AND MARKETING PLAN WORK. THE OTHER PROBLEM IS IT'S EFFECTIVELY IMPOSSIBLE TO SELL TONS OF WHITE POWDER IN A CANNISTER TO PEOPLE YOU DON'T KNOW. IT'S A VERY DIFFICULT BUSINESS MODEL PARTICULARLY WITH ALL OF THE DISTRIBUTORS BRING WILLING TO DUMP PRODUCT AT PRODUCT AT COST OR BELOW COST. SO THE INTERESTING QUESTIONS IS IT'S NOW JULY SO IT'S TWO MONTHS AFTER THEY SAID THEY WERE IN ADVANCED DISCUSSIONS ABOUT A POSSIBLE RESOLUTION WITH THE FTC, 5 MONTHS AFTER THEY MENTION IT FOR THE FIRST TIME. WHAT'S REALLY GOING ON IS THE GOVERNMENT IS TAKING THIS INCREDIBLY SERIOUSLY AND THE ONLY THING I THINK THE GOVERNMENT UNDERSTANDS WHAT WE UNDERSTAND IF YOU DON'T CHANGE THE INCENTIVES OF THE MARKETING PLAN AND GET RID OF THE INVENTORY LOADING INCENTIVES AND THE REQUIREMENT TO BUY THOUSANDS OF DOLLARS WORTH OF PRODUCT IN ORDER TO EARN ROYALTIES THERE'S NO WAY FOR HERBALIFE TO EFFECTIVELY MONITOR AND STOP THE ABUSE. WHY? BECAUSE INCENTIVES DRIVE HUMAN BEHAVIOR AND IF YOU DON'T CHANGE THE INCENTIVES THE BEHAVIOR ISN'T GOING TO CHANGE AND I THINK THAT'S WHY THIS THING HASN'T SETTLED.

WAPNER: THERE ARE A NUMBER OF THINGS WITHIN THAT. FIRST AND FOREMOST HERBALIFE HAS SEEN YOUR VIDEOS AND THEY KNEW YOU WERE GOING TO BE ON TODAY BY VIRTUE OF US PROMOTING YOUR APPEARANCE. THEY SENT ME THE FOLLOWING STATEMENT. I WANT TO READ IT AND GET YOUR REACTION TO IT. THIS IS A QUOTE FROM AN HERBALIFE SPOKESPERSON, IT'S BEEN THREE YEARS AND BILL HAS LOST HUNDREDS OF MILLIONS OF DOLLARS. HE ADMITTED IN A RECENT FORTUNE PIECE IT WAS COSTING MORE THAN $100 MILLION A YEAR IN CARRYING COSTS. WHEN IS IT TIME TO JUST SAY HE GAVE IT A VALIANT TRY BUT LIKE BORDERS, JCPENNEY, TARGET HE WAS JUST MISINFORMED. THAT FROM A HERBALIFE SPOKESPERSON.

ACKMAN: IT DOESN'T COST US $100 MILLION A YEAR. THE COST TO CARRY THE POSITION IF WE WERE $1 BILLION SHORT TODAY. THE COST TO BORROW IS ABOUT 2% THERE'S A DIVIDENT SO IT'S PROBABLY $20 MILLION. THAT'S REAL MONEY IT IS NOT $100 MILLION. IT'S INTERESTING HERBALIFE IS TRYING TO GET US TO GO AWAY AND STEER THE FOCUS FROM THE FACTS. THE FACTS HERE ARE THE NUMBER THAT HERBALIFE IS THROWN OUT $200 MILLION SETTLEMENT NUMBER FORGET THE INJUNCTIVE RELIEF PART. I THINK THAT WOULD BE THE LARGEST CONSUMER PROTECTION FINE EVER COLLECTED BY THE FEDERAL TRADE COMMISSION. SO CLEARLY THEY'VE DONE A LOT OF THINGS WRONG HERE AND THAT'S WHAT THEY WOULD BE WILLING TO PAY IN A MUTUAL RESOLUTION. THAT'S NOT WHAT THE GOVERNMENT IS WILLING TO ACCEPT. THAT'S WHAT THEY HAVE APPARENTLY THROWN OUT AS A NUMBER THEY'RE WILLING TO PAY. THE REALITY HERE IS THIS IS NOT GOING TO BE ABOUT A DOLLAR AMOUNT THAT HERBALIFE PAYS TO THE GOVERNMENT TO RESOLVE THIS. THE ONLY WAY THIS THING GETS RESOLVED IN MY OPINION IS IF HERBALIFE MAKE MATERIAL CHANGES TO THEIR INCENTIVE STRUCTURE TO STOP THE INCENTIVES TO RECRUIT AND MY GUESS IS THAT'S WHAT THE GOVERNMENT IS PUSHING FOR. HERBALIFE REALIZES IT CAN'T ACCEPT THOSE CHANGES OR THEY'LL GO BANKRUPT BECAUSE NO IS ACTUALLY BUYING THE PRODUCT YOU CAN'T MAKE MONEY SELLING THE PRODUCT AT RETAIL. THIS IS GOING TO END UP WITH THE GOVERNMENT SUING HERBALIFE FOR BEING A PYRAMID SCHEME OR HERBALIFE CAPITULATING AND AGREEING TO CHANGES. AND IN EITHER CIRCUMSTANCE THE STOCK IS NOT GOING TO BE $60 A SHARE AND TRADING AT 14.5X EARNINGS. THAT'S WHY CERTAINLY WE'VE BEEN A PATIENT INVESTOR HERE, I THINK THIS IS THE MOST ATTRACTIVE HERBALIFE HAS BEEN FROM A RISK REWARDS STANDPOINT AND THAT'S WHY WE'VE STAYED SHORT. AND IF WE FELT IT WASN'T AN ATTRACTIVE INVESTMENT WE WOULD HAVE COVERED A LONG TIME AGO.

WAPNER: UNDERSTOOD LOOK IT'S BEEN A PAINFUL INVESTMENT. TO THIS POINT THERE'S SORT OF NO GETTING AROUND THAT. AS YOU SAID THE STOCK IS SITTING RIGHT AT $60 A SHARE. DO YOU THINK -- I WAS THINKING ABOUT THIS AND NOT THAT I'VE SPOKEN WITH ANY OF YOUR INVESTOR INVESTORS, I CAN'T SAY I HAVE A VIEW FROM ANY OF THEM, BUT HAVE YOU EVER THOUGHT DO YOUR INVESTORS WANT YOU TO CONTINUE WITH THIS FIGHT OR DO YOU THINK SOME OF THEM SAY LET'S JUST MOVE ON, FIND SOMETHING ELSE?

ACKMAN: YEAH, THE GOOD NEWS HERE IS IT DOESN'T ACTUALLY CONSUME A LOT OF OUR RESOURCES. I JOKE ABOUT GOING INTO THE MOVIE PRODUCTION BUSINESS BUT ELIZABETH MANN AND FRAN MCGILL AT PERSHING SQUARE HAVE A LITTLE BIT OF SOFTWARE AND THE BEAUTY OF TECHNOLOGY AND JUST THOUSANDS OF HOURS OF FOOTAGE THEY PUT TOGETHER A FIVE MINUTE CLIP EVERY DAY AND IT'S A FUN ACTIVITY FOR THEM AND IT MAKES A VERY VERY IMPORTANT POINT ABOUT HOW PERVASIVE THE FRAUD IS AND HOW IT CONTINUES RIGHT UNDER THE NOSE OF THE GOVERNMENT EVEN IN THE MIDST OF A SETTLEMENT. I THINK THAT'S A USEFUL EXERCISE. I THINK ALL OUR INVESTORS WOULD LOVE FOR THING TO BE RESOLVED AND FRANKLY I THINK THE -- WE WOULD CERTAINLY LIKE THIS TO BE RESOLVED SOON AND I THINK WE'RE QUITE CLOSE. IT'S HERBALIFE THAT'S SAID THEY'RE IN ADVANCED DISCUSSIONS ABOUT A POTENTIAL RESOLUTION BUT THEY ALSO SAY THAT IF THEY CAN'T, IF NO ASSURANCES CAN BE GIVEN THEY'RE GOING TO – THIS THING IS GOING TO BE RESOLVED IN A NEGOTIABLED SETTLEMENT AND I THINK THE GOVERNMENT WILL ONLY NEGOTIATE SO LONG. AT SOME POINT THE GOVERNMENT WILL HAVE TO BRING A LAWSUIT HERE AND THEY BRING A LAWSUIT ACCUSING HERBALIFE OF BEING A PYRAMID SCHEME I THINK THE COMPANY IS DONE.

WAPNER: WHAT IF SOMEONE LOOKS AT THESE VIDEOS AGAIN 18 VIDEOS IN 18 DAYS AND THEY SAY ACKMAN IS TRYING TO UNFLUENCE IF NOT MANIPULATE THE FTC. HOW WOULD YOU RESPOND TO THAT?

ACKMAN: WE'RE PUTTING OUT VIDEOS OF HERBALIFE DISTRIBUTORS. IT'S NOT LIKE WE CREATED -- WE'RE NOT MAKING STATEMENTS ON BEHALF OF THE COMPANY. THE FACTS HERE SPEAK FOR THEMSELVES AND BY PROVIDING TRANSPARENCY WHAT'S ACTUALLY GOING ON WHAT'S INTERESTING IS WHAT'S HAPPENED OVER THE LAST SEVERAL YEARS IS THE HERBALIFE DISTRIBUTORS USED TO BE MORE OVERT ABOUT DEFRAUDING PEOPLE AND NOW THEY'VE GOTTEN MORE SOPHISTICATED IN USING TECHNOLOGY AND THEY'RE DOING THESE ONLINE WEBINARS AND I REALLY ENCOURAGE PEOPLE TO WATCH THE VIDEOS. MANY OF THEM PASSWORD PROTECTED AND THEY SUCK YOU INTO A MONEY MAKING OPPORTUNITY ON THE WEB. THEY DON'T TELL YOU IT'S HERBALIFE AND THEN THEY VERY QUIETLY HAVE BEEN GOING ABOUT MAKING THESE STATEMENTS AND RECRUITING PEOPLE. MY SUSPICIONS HERBALIFE IS THEY EFFECTIVELY ENCOURAGED THEM OR EFFECTIVELY PUSHED THIS UNDERGROUND BUT THE REALITY IS THE FRAUD CONTINUES. I THINK BY OUTING THESE TOP DISTRIBUTORS OF THE LAST 18 I THINK THREE OR FOUR OF THEM HERBALIFE RECENTLY BROUGHT DOWN TO WASHINGTON, D.C. TO MAKE THEIR CASE THEY'RE A LEGITIMATE COMPANY. THE PEOPLEWE HAVE IN THESE VIDEOS AND I ENCOURAGE YOU TO WATCH THEM, SO IT'S NOT OUR WORDS, IT'S THE DISTRIBUTORS WORDS, THESE ARE THE SAME DISTRIBUTORS THAT WENT AND MET WITH SENATORS AND CONGRESSMEN FROM THEIR COMMUNITIES TALKING ABOUT HOW GREAT HERBALIFE IS AND WHAT A WONDERFUL COMPANY IT IS AND HOW EVIL SHORTSELLERS ARE THE REALITY IS THE VERY SAME PEOPLE ARE SAYING HOW ANYONE CAN MAKE TENS OF THOUSANDS AND EVEN MILLIONS OF DOLLARS IN THIS PYRAMID SCHEME.

WAPNER: THERE IS AN FTC, FROM WHAT I UNDERSTAND, AN FTC – I GUESS WHAT THEY CALL A CLOSED DOOR SESSION THIS AFTERNOON. HAVE NO IDEA OBVIOUSLY IF HERBALIFE IS SCHEDULED TO BE DISCUSSED TODAY OR NOT, BUT IT'S OF YOUR THINKING THAT YOU THINK A RESOLUTION IS COMING SOON?

ACKMAN: LOOK, I DON'T KNOW HOW LONG – YOU KNOW, AGAIN, I'M RELYING REALLY MORE ON WHAT HERBALIFE HAS DISCLOSED, WHICH YOU KNOW, IN THE SEC FILING THEY'VE SAID THAT THEIR – THEY'VE BEEN SAYING NOW FOR ALMOST SIX MONTHS THAT THEY'RE CLOSE TO A POTENTIAL RESOLUTION, BUT THEY ALSO SAY – AND THE OTHER ALTERNATIVE IS THAT – SAYS THE COMPANY IS CURRENTLY IN DISCUSSIONS. HOLD ON, HERE'S THE LATEST WORDS.

WAPNER: NO, I HAVE IT RIGHT IN FRONT OF ME FROM THEIR FILING AND THAT WAS THAT THE DISCUSSIONS HAVE PROGRESSED, AND I'M QUOTING HERE FROM THAT FILING. "DISCUSSIONS HAVE PROGRESSED TO AN ADVANCED STAGE. THE RANGE OF OUTCOMES NOW INCLUDE LITIGATION OR SETTLEMENT. WE ALSO ANNOUNCED THAT IF A SETTLEMENT IS REACHED WITH THE FTC, IT WOULD LIKELY INCLUDE INJUNCTIVE AND OTHER RELATES – AS WELL AS A MONETARY PAYMENT WITH OUR BEST ESTIMATE OF THAT PAYMENT BEING $200 MILLION."

ACKMAN: AND THEY ALSO SAY IF DISCUSSIONS WITH THE FTC DO NOT CONTINUE TO PROGRESS, IT'S LIKELY THAT LITIGATION WOULD ENSUE. AND I GUESS MY INTERPRETATION OF THAT IS THAT STATEMENT WAS MADE ON MAY 5th. IT'S NOW MORE THAN TWO MONTHS LATER. IT DOESN'T SEEM TO ME LIKE A LOT OF PROGRESS HAS BEEN MADE. I MEAN, HOW LONG DOES IT TAKE TO NEGOTIATE? YOU KNOW, IF THERE WAS A SETTLEMENT THAT HERBALIFE COULD ACCEPT, THEY WOULD HAVE ACCEPTED IT ALREADY. SO, I MEAN, IT'S VERY CLEAR THAT THE GOVERNMENT IS APPROPRIATELY HOLDING THE LINE AT WHAT THEY'RE WILLING TO ACCEPT AND HERBALIFE IS MAYBE MAKING WHATEVER CASE IT CAN, BUT AT SOME POINT THE GOVERNMENT IS GOING TO PULL THE TRIGGER ON LITIGATION AND I THINK THAT'S ACTUALLY GOING TO BE THE BEST OUTCOME HERE.

WAPNER: WELL, LET ME ASK YOU A QUESTION. LET ME END ON THE HERBALIFE PART OF OUR CONVERSATION BY WHAT HAPPENS IF YOU'RE WRONG? WHAT HAPPENS IF THERE IS A SETTLEMENT? WHAT HAPPENS IF IT IS IN THAT MONETARY BALLPARK, WE COULD CALL IT, OR AT LEAST SOMEWHERE CLOSE? WHAT DO YOU DO NEXT?

ACKMAN: SURE. SO THINK ABOUT IT THIS WAY. THE LAST TIME THE FTC HAD A MEANINGFUL SETTLEMENT I THINK IT WAS THIS LIFELOCK SCAM AND THAT WAS A $100 MILLION FINE. AND WHAT THE FTC DOES WHEN THEY DEAL WITH ONE OF THESE SCAMS AND THEY COME TO ONE OF THESE SETTLEMENTS IS THEY HOLD A PRESS CONFERENCE. THEY ANNOUNCE A PRESS CONFERENCE, THEY ANNOUNCE $100 MILLION FINE AND THEY EXPLAIN WHY THE FTC SOUGHT THE FINE. AND SO IMAGINE THERE'S A PRESS RELEASE TOMORROW FROM THE FTC, THEY SAY THEY'RE HOLDING A PRESS CONFERENCE, THE COMMISSIONER GETS UP, YOU KNOW, OFTEN A COUPLE OF ATTORNEY GENERALS WORK ALONGSIDE THE FTC AND THEY SAY WE ARE NOW PUNISHING HERBALIFE WITH THE LARGEST CONSUMER PROTECTION FINE IN THE HISTORY OF THE FEDERAL TRADE COMMISSION'S CONSUMER PROTECTION DIVISION. NUMBER ONE, THEY'RE GOING TO EXPLAIN HERE ARE ALL THE EVIL ACTS THIS COMPANY HAS DONE THAT HAVE LED US TO CHARGE THE HIGHEST FINE WE HAVE EVER CHARGED – AND I THINK IT IS GOING TO BE MORE THAN $200 MILLION – THAT IS HERBALIFE'S NUMBER. AND THEN, HERE ARE THE STEPS THE FTC IS TAKING TO MAKE SURE THAT CONSUMERS ARE NOT DEFRAUDED AGAIN. AND THEY'RE GOING TO HAVE TO ANNOUNCE WHATEVER THOSE STEPS ARE AND HOW THOSE STEPS ARE GOING TO BE ENFORCED. IT'S GOING TO BE SOMETHING – MY GUESS IS IT IS GOING TO BE ONE OF ONE THE MOST WATCHED PRESS CONFERENCES IN THE HISTORY OF THE FTC.

WAPNER: I WOULDN'T DOUBT THAT.

ACKMAN: SO MY POINT HERE IS THE FTC IS NOT GOING TO – I CAN'T SEE ANY SCENARIO IN WHICH THAT'S GOING TO BE GOOD FOR HERBALIFE. AND THEY'RE JUST GOING TO BE ALLOWED TO CONTINUE TO GO ABOUT THEIR BUSINESS. AGAIN, WE'VE YET TO FIND ONE VIDEO ON THE WEB OF A DISTRIBUTOR TALKING ABOUT HOW TO SELL THE PRODUCT AT RETAIL TO A CONSUMER. EVERY DISTRIBUTOR PRESENTATION, WHETHER IT TAKES PLACE IN A HOTEL ROOM OR WHETHER IT TAKES PLACE IN A WEBINAR, IS ABOUT HOW TO RECRUIT OTHERS SO YOU CAN GET YOUR CHECK AND RETIRE YOUR PARENTS AND BUY A HOME FOR YOUR KIDS. IT'S NOT ABOUT RETAIL SALES. AND THE COMPANY IS A PYRAMID SCHEME. IF RECRUITING IS EFFECTIVE – MORE DOMINANT THAN RETAIL SALES. AND THAT IS A CERTAINTY FOR HERBALIFE.

WAPNER: HAVE YOU EVER CONSIDERED, AND WE WILL MAKE SERIOUSLY THIS THE LAST HERBALIFE QUESTION AT LEAST. HAVE YOU EVER CONSIDERED WHAT MAY HAPPEN AFTER THIS IS ALL RESOLVED? AND YOU REMEMBER THOSE RUMORS AND SPECULATION AS MUCH AS I DO SOME YEARS AGO SINCE THIS WHOLE THING STARTED WHETHER HERBALIFE WOULD EVEN REMAIN A PUBLICLY TRADED COMPANY FOR THE DURATION. HAVE YOU THOUGHT ABOUT THE POSSIBILITY OF ONCE THIS IS RESOLVED WITH THE GOVERNMENT OF HERBALIFE BEING TAKEN OUT, BEING TAKEN PRIVATE, WHAT THAT COULD MEAN FOR YOUR POSITION?

ACKMAN: I REMEMBER, AGAIN, I FEEL VERY GOOD ABOUT OUR INVESTMENT. I THINK NO PRIVATE EQUITY FIRM IS GOING TO BUY THIS COMPANY. LOOK, EVEN IF YOU THOUGHT IT WAS A LEGITIMATE BUSINESS, THEY RECRUIT 2 MILLION DISTRIBUTORS A YEAR AND THEY LOSE 2 MILLION DISTRIBUTORS A YEAR. AND THAT IS NOT A BUSINESS WITH A VERY STABLE CUSTOMER BASE. IT IS NOT A BUSINESS YOU WANT TO PUT A LOT OF LEVERAGE ON AND TAKE PRIVATE. AND THIS WOULD ACTUALLY BE, YOU KNOW, ANYTHING NEAR THE CURRENT SHARE PRICE OR A PREMIUM WOULD BE A BIG PRIVATE EQUITY DEAL. IT WOULD REQUIRE A VERY BIG PRIVATE EQUITY CHECK AND BELIEVE ME IF THAT SHOULD HAVE HAPPENED WOULD HAVE HAPPENED A LONG TIME AGO.

WAPNER: SO LET ME MOVE –

ACKMAN: NEXT TOPIC.

WAPNER: LET ME MOVE ON TO VALEANT BECAUSE CERTAINLY THAT IS THE TOPIC DU JOUR OF AT LEAST THE LAST COUPLE OF DAYS AT MINIMUM. OUR STORY YESTERDAY, WHICH WE FIRST REPORTED HERE, WAS NEAR $5 MILLION SHARE SALE BY THE FORMER CEO, MICHAEL PEARSON. NETTED CLOSE TO $100 MILLION. YOU'RE ON THE BOARD OF THE COMPANY. WHAT'S YOUR RESPONSE TO THAT SALE BY MR. PEARSON?

ACKMAN: LOOK, IT'S KIND OF SAD. THE WHOLE THING IS SAD AND THE WHOLE THING IS SAD FOR MIKE. IF YOU REMEMBER, WHEN THE STOCK FIRST DROPPED, YOU KNOW, MIKE IS A GUY THAT BOUGHT VALEANT STOCK AND NEVER SOLD IT. AND THEN WHEN THE STOCK COLLAPSED, HE HAD MARGIN STOCK TO MAKE A $50 MILLION CHARITABLE DONATION TO DUKE UNIVERSITY AND WHEN THE STOCK COLLAPSED, HE GOT A MARGIN CALL FROM GOLDMAN SACHS AND HE WAS SOLD OUT OF A BIG CHUNK OF HIS POSITION. NOW THE UNFORTUNATE THING IS WHEN YOU BUY STOCK AT A LOW PRICE, IT RUNS UP TO A VERY HIGH PRICE, YOU BORROW MONEY AGAINST THAT POSITION AND THEN THE STOCK COLLAPSES AND YOU GET SOLD OUT. YOU KNOW, GOLDMAN SACHS SELLS ENOUGH STOCK TO PAY OFF YOUR MARGIN LENDER, IT SELLS OFF ENOUGH STOCK TO PAY OFF THE LOAN, BUT THEY DON'T SELL ENOUGH STOCK FOR YOU TO PAY YOUR TAXES ON THAT GAIN. AND MY UNDERSTANDING, BASED ON A PRESS RELEASE THE COMPANY PUT OUT TODAY IN A STATEMENT FROM MIKE PEARSON, IS THAT THE OPTION EXERCISE AND – YOU KNOW, WHICH ITSELF IS TAXABLE, THE NET PROCEEDS AFTER TAX FROM THAT SALE WERE USED TO PAY THE TAXES ON THE SALE – THE FIRST POSITION I THINK HE GOT SOME NET PROCEEDS, BUT MIKE IS PROBABLY NOT LIKELY TO BE RUNNING FORWARD WITH A NEW JOB SOON. SO I THINK IT'S KIND OF SAD HE WAS FORCED TO SELL OUT AT THIS PRICE.

WAPNER: THEY SAY IN A STATEMENT TODAY, VALEANT DOES, AND THEY DO HAVE A QUOTE FROM MR. PEARSON. SAYS THE FOLLOWING. "I CONTINUE TO BELIEVE IN VALEANT, JOE" AS IN JOE PAPA THE NEW CEO, "AND THE REST OF THE MANAGEMENT TEAM. WHILE I'M TRIMMING MY OWNERSHIP POSITION FOR PERSONAL REASONS, I PLAN ON HOLDING MY REMAINING SHARES UNTIL THE COMPANY RECOVERS AND RETURNS TO BEING TRADED ON FUNDAMENTALS." THE ANALYSTS DAVID MARIS OVER AT WELLS FARGO SAID, "AS THE OUTGOING CEO, WE PRESUME PEARSON HAD INSIGHT INTO THE STATE OF THE BUSINESS AND WE CONSIDER THE SELLING AS A NEGATIVE SIGN." WHY SHOULDN'T THE MARKET VIEW MR. PEARSON GETTING OUT AS A NEGATIVE SIGN?

ACKMAN: BECAUSE I THINK MIKE WAS FORCED TO SELL. THE GOVERNMENT UNFORTUNATELY DOESN'T WAIT FOR YOU TO PAY YOUR TAXES. BUT LOOK, I THINK THE COMPANY IS GOING TO HAVE AN EARNINGS CALL, I THINK, AT THE EARLY PART OF AUGUST. JOE WILL HAVE BEEN AT THE COMPANY FOR ABOUT THREE MONTHS.THAT CERTAINLY IS A SUFFICIENT PERIOD OF TIME FOR HIM TO CLARIFY WHAT THE STRATEGY IS GOING FORWARD. I THINK, THE STOCK STILL SUFFERS A LOT FROM UNCERTAINTY. OBVIOUSLY THERE'S BEEN A PRETTY BIG OVERHANG. BIG SHAREHOLDERS SOLD OUT THEIR ENTIRE POSITION. YOU KNOW, MIKE'S SOLD A BUNCH OF STOCK. AND I THINK NEW INVESTORS – YOU KNOW, THERE'S STILL A LOT TO BE CLARIFIED ABOUT THE STORY. SO I THINK JOE WILL BE VERY PREPARED FOR THAT CONFERENCE CALL. JUST TO GIVE YOU A COUPLE OF ITEMS, A LOT OF QUESTIONS WE'VE BEEN GETTING FROM INVESTORS AND OTHER PEOPLE, YOU KNOW, WHY HASN'T THE COMPANY SOLD ASSETS, SHOULDN'T THE COMPANY BE SELLING ASSETS TO PAY DOWN DEBT. AND THE ANSWER IS THAT VALEANT DOESN'T OWN A SECURITIES PORTFOLIO THAT YOU CAN LIQUIDATE OVERNIGHT. IT OWNS – IT IS FORTUNATE IN HAVING A VERY LONG CAPITAL STRUCTURE. SO THERE IS NO NEED TO FIRE SALE ASSETS. SINCE WE JOINED THE BOARD OF THE OCMPANY, AND RECENT EVENTS HAVE TRANSPIRED, THE PHONE IS LITERALLY RINGING OFF THE HOOK FROM STRATEGIC BUYERS WHO WANT TO BUY SOME OF THE NON-CORE ASSETS THE COMPANY IS OPEN TO SELLING. A NUMBER OF ANALYSTS SAID LOOK, IT'S NOT GOING TO DO VALEANT ANY GOOD TO SELL A FEW HUNDRED MILLION DOLLARS WORTH OF ASSETS. AND I THINK ONE OF THE INTERESTING THINGS HERE IS ONE OF THE THINGS MIKE WAS VERY GOOD IS IDENTIFYING AND ACQUIRING VERY GOOD ASSETS. AND VALEANT HAS A VERY DIVERSIFIED PORTFOLIO OF ASSETS AND THEY ARE LITERALLY – THERE'S $10 BILLON WORTH OF STUFF I WOULD SAY THAT MOST SHAREHOLDERS DON'T EVEN KNOW EXIST THAT I WOULD CERTAINLY DEFINE AS NON-CORE. AND YOU KNOW, I THINK JOE WILL PROVIDE MORE CLARITY BUT THE COMPANY CAN, I THINK, VERY COMFORTABLY SELL LITERALLY BILLIONS OF DOLLARS OF ASSETS WITHOUT EFFECTING ANY OF THE CORE FRANCHISES OF THE COMPANY. AND I THINK, YOU KNOW, THAT'S NOT GOING TO HAPPEN OVERNIGHT. BUT THE COMPANY HAS HIRED BANKERS, BOOKS ARE BEING PUT TOGETHER. THOSE ASSETS WILL BE SHOWN TO INTERESTED BUYERS AND MY GUESS IS SOMETIME AROUND YEAR END THE COMPANY WILL START ANNOUNCING FAIRLY SIGNIFICANT ASSET SALES. SO THE COMPANY WILL DELEVER. JOE IS WORKING TO FIX THE DERMATOLOGY BUSINESS. WALGREENS IS VERY INTERESTED IN FIXING THAT DISTRIBUTION CHANNEL BECAUSE I THINK WALGREENS WOULD LOVE TO DO A VALEANT DEAL WITH OTHER DRUG COMPANIES. AND IF THE VALEANT DEAL IS NOT PERFORMING THE WAY IT SHOULD BE, IT IS NOT GOOD FOR WALGREENS, IT IS NOT GOOD FOR VALEANT, OBVIOUSLY. I THINK JOE IS GOING TO GET THAT FIXED. HE'S MADE A LOT OF PROGRESS. I THINK HE'S STARTED TO MAKE PROGRESS ON THE SALES FORCE AND MAKING SURE THOSE PRODUCTS ARE DOING WHAT THEY SHOULD. SO I THINK, MY EXPERIENCE WITH HIM OVER THE LAST COUPLE OF MONTHS IS INCREDIBLY UNFLAPPABLE, HARD WORKING, FOCUSED, STRONG OPERATOR AND I THINK HE'LL HAVE A LOT OF GOOD STUFF TO REPORT TO PEOPLE ABOUT PROGRESS, PLANS, ET CETERA AND THEN THIS WILL START TO BECOME A STOCK PEOPLE CAN OWN ONCE THEY KNOW WHAT THE PLANS ARE GOING FORWARD.

WAPNER: AND YOU'RE STICKING TO WHAT YOU TOLD ME PRIOR ON THIS VERY PROGRAM THAT THERE ARE NO PLANS AT THIS POINT TO SELL CORE ASSETS LIKE BAUSCH AND LOMB?

ACKMAN: THAT'S RIGHT. BAUSCH + LOMB HAS A VERY LOW TAX BASIS RELATIVE TO WHAT WE BELIEVE IT'S WORTH. WE THINK IT'S A GREAT FRANCHISE. WE THINK IT'S A FRANCHISE YOU BUILD ON AND YOU KNOW, IT'S REALLY THE CORE OF THE COMPANY. YOU COULD CERTAINLY ENVISION A DAY WHERE THE COMPANY SOLD OFF A LOT OF NON-CORE ASSETS, THE BUSINESS WAS A MORE FOCUSED BUSINESS AND BAUSCH + LOMB BECOMES AN EVEN MORE DOMINANT PART OF THE FRANCHISE AND – IN THE COMPANY BAUSCH + LOMB. I THINK IT'S MORE AN ASSET AND A COMPANY YOU BUILD VALEANT AROUND THAN AN ASSET YOU WOULD WANT TO SELL. ON AN AFTER TAX BASIS, IT WOULD BE A VERY INEFFICIENT SALE.

WAPNER: ANDREW LEFT YESTERDAY OF CITRON RESEARCH, YOU REFERENCED SEQUOIA, WHICH AT ONE POINT WAS THE LARGEST SHAREHOLDER IN VALEANT SELLING OUT OF THEIR ENTIRE POSITION. MR. LEFT WHO SAID HE HAS PUT ON A NEW SHORT POSITION AS A SHORT-TERM TRADE SAID, "IT'S OBVIOUS IT'S A ZERO NOW." YOU'RE RESPONSE.

ACKMAN: LOOK, I THINK ANDREW LEFT IS A CHARISMATIC GUY. AND HE MADE ONE OF THE GREAT SHORT CALLS, I THINK, EVER. I GIVE HIM ENORMOUS CREDIT FOR THAT. AND THEN HE MADE A LONG CALL ON VALEANT AND THEN HE MADE – NOW HE'S MADE A SHORT CALL ON VALEANT. WHAT I FIND INTERESTING IS HE NEVER TELLS YOU WHAT HE DOES WITH HIS POSITION. SO OBVIOUSLY, HE PUTS THE TRADE ON. HE GOES ON CNBC SAYS IT'S A SHORT, THEN HE COVERS AND THEN HE PUTS THE POSITION – BUYS SOME CALLS OR GOES LONG THE STOCK AND THEN HE GOES ON TV AND SAYS IT'S A LONG, WHICH HE DID, I DON'T KNOW, MAYBE A MONTH OR TWO AGO. AND THEN I GUESS YESTERDAY IT'S SHORT AGAIN. I JUST FEEL LIKE YOU GUYS ARE DOING A VERY GOOD JOB HELPING HIM MAKE MONEY ON HIS PORTFOLIO. I'M NOT SURE IT'S GOOD FOR INVESTORS. IF HIS REASON FOR GOING SHORT IS THAT MIKE PEARSON SOLD THE STOCK TO PAY TAXES OR SEQUOIA EXITED, I DON'T THINK THOSE ARE GOOD REASONS. I THINK THE UNDERLYING FRANCHISES HERE ARE STRONG. THERE'S CLEARLY BEEN BUSINESS DISRUPTION AS A RESULT OF RECENT EVENTS, BUT I THINK WE HAVE A VERY STRONG CEO WHOSE, I THINK, CORE COMPETENCIES INCLUDE FIXING THOSE PROBLEMS AND THE COMPANY GENERATES CASH EVERY DAY AND THAT CASH WILL BE USED TO DELEVER THE BUSINESS. THE MULTIPLE AT WHICH THE STOCK TRADES AT DOESN'T CHANGE. JUST THE DELEVERAGING OF THE COMPANY YOU'RE GOING TO MAKE A LOT OF MONEY AT THE CURRENT SHARE PRICE. SO LOOK, IT'S NOT WITHOUT RISK, BUT WE THINK JOE'S DOING A VERY GOOD JOB AND I THINK HE'LL HAVE A LOT MORE TO REPORT IN A FEW WEEKS TO INVESTORS, WHICH I THINK WILL HELP GET PEOPLE COMFORTABLE. ANY WAY, I GOT TO RUN. IT WAS SUPPOSED TO BE TEN MINUTES.

WAPNER: I KNOW YOU DO. LET ME ASK YOU LASTLY BEFORE I LET YOU GO BECAUSE MONDELEZ IS A BIG POSITION FOR YOU AS WELL AND IT IS IN THE NEWS REGARDING THE HERSHEY BID WHICH WAS TURNED DOWN. DOES THAT DEAL ULTIMATELY HAPPEN AND HOW MUCH DO YOU THINK MONDELEZ SHOULD PAY IF IN FACT IT CAN HAPPEN?

ACKMAN: I WOULD LEAVE THAT UP TO MONDELEZ AND THEIR BOARD. I THINK THEY HAVE A SMART BOARD OF DIRECTORS AND WE'LL LET THEM FIGURE THAT OUT.

WAPNER: WE WILL LEAVE IT THERE. BILL, THANKS FOR CALLING IN. I APPRECIATE YOUR TIME TODAY.

ACKMAN: THANK YOU VERY MUCH.WHEN: Today, Thursday, July 14th

WHERE: CNBC's "Fast Money Halftime Report"

Following is the unofficial transcript of a CNBC interview with Pershing Square Capital CEO Bill Ackman on CNBC's "Fast Money Halftime Report" (M-F, 12PM-1PM ET) today, Thursday, July 14th. Following are links to the interview on CNBC.com:http://video.cnbc.com/gallery/?video=3000534409, http://video.cnbc.com/gallery/?video=3000534413 and http://video.cnbc.com/gallery/?video=3000534421.

All references must be sourced to CNBC.

SCOTT WAPNER: WE WANT TO GET TO THIS NEW STORY FOR US TODAY. BILL ACKMAN'S PERSHING SQUARE RELEASING ANOTHER NEW VIDEO TODAY. THE 18th IN THE LAST 18 BUSINESS DAYS WARNING INVESTORS AND EVERYONE ELSE FOR THAT MATTER ABOUT WHAT HE CALLS THE EVILS OF HERBALIFE A COMPANY MR ACKMAN HAS BEEN SHORTIGN SINCE DECEMBER OF 2012. TODAY VIDEO SHOWS A PITCHMAN GIVING A HARD SALE TO RECRUITE NEW MEMBERS.

EXCERPT FROM THE RECRUITEMENT VIDEO PLAYED

WAPNER: THOSE QUOTES CONTRADICTED WITH FACTS FROM PERSHING SQUARE LIKE THIS ONE SAYING CONTRARY TOTHAT SAID GENTLEMAN'S CLAIMSA LESS THAN 1% OF HERBALIFE DISTRIBUTORS ARE EARNING MORE THAN MINIMUM WAGE FROM THAT COMPANY. 90% OF DISTRIBUTORS QUIT AFTER THEIR FIRST YEAR THAT ACCORDING TO PERSHING SQUARE AND THAT WEBSITE. JOINING US EXCLUSIVELY NOW IS BILL ACKMAN HE IS THE FOUNDER AND CEO OF PERSHING SQUARE CAPITAL MANAGEMENT. BILL WELCOME BACK.

BILL ACKMAN: THANK YOU.

WAPNER: I SAID AT THE TOP 18 VIDEOS IN 18 BUSINESS DAYS. WHAT'S GOING ON. WHY SO MANY?

ACKMAN: WE'RE DIVERSIFYING INTO THE MOVIE PRODUCTION BUSINESS WE THINK IT IS A MUCH MORE PROFITABLE ENTERPRISE. WHAT'S INTERESTING IS IN FEBRUARY OF THIS THIS YEAR IN HERBALIFE'S 10K THEY SAID THEY WERE IN DISCUSSIONS WITH THE FDC ABOUT A POTENTIAL RESOLUTION OF THE INVESTIGATION. AND REALLY OVER THE LAST YEAR THEY'VE BEEN SAYING WELL MAYBE THERE WAS SOME ROGUE DISTRIBUTORS OUT THERE BUT WE'VE REFORMED OUR PRACTICES AND WE'RE BUILDING IT BETTER AND IN MAY THE COMPANY SAID WE'RE IN ADVANCED –HAVE DISCUSSIONS IN ADVANCED STAGES WITH THE FTC ABOUT A POTENTIAL SETTLEMENT EVEN THREW OUT A NUMBER 2OO MILLION DOLLARS AND THERE WAS A LOT OF DISCUSSION ON CNBC AND A NUMBER OF THE ANCHORS WERE TALKING ABOUT A SLAP ON THE WRIST HERBALIFE IF GOING TO MOVE ON AND THE STOCK HAS RUN ON THE POSSIBILITY OF A SETTLEMENT WHERE THEY PAY WHAT LOOKS LIKE A MODEST FINE IN THE CONTEXT OF HERBALIFE'S MARKET CAP AND THEY GO ABOUT THEIR BUSINESS. YOU WOULD HAVE TO ASSUME THAT DURING THIS PERIOD OF NEGOTIATING A SEATTLEMENT WITH THE FTC ASSUMING THAT IS WHAT IS ACTUALLY GOING ON THE COMPANY WOULD BE INCREDIBLY SCRUPULOUS ABOUT MAKING SURE NONE OF ITS DISTRIBUTORS WERE DOING ANYTHING THAT WOULD BE DEEMED INAPPROPRITATE THAT WOULD HARM THEIR ABILITY TO SETTLE WITH THE REGULATORS. IN FACT, EVERY DAY THOUSANDS OF HERBALIFE DISTRIBUTORS GO ON THE WEB TO HOST WEBINARS AND THEY ATTEMPT TO RECRUIT PEOPLE WITH FALSE AND MISLEADING STATEMENTS ABOUT THE POTENTIAL OF HERBALIFE BUSINESS OPPORTUNITIES. THESE PEOPLE THAT GO ONLINE WE FEATURED 18 OF THEM OVER THE LAST 18 BUSINESS DAYS AND YOU CAN EXPECT ANOTHER ONE TOMORROW AND MONDAY AND TUESDAY AND WEDNESDAY. WE HAVE THOUSANDS OF HOURS OF FOOTAGE OF THESE DISTRIBUTORS BILKING OTHER PEOPLE OUT OF THEIR HARD EARNED MONEY.

WAPNER: WHAT ABOUT SOME OF THE CRITICISM THAT I KNOW YOU'VE HEARD YOURSELF THAT YOU USE SELECTIVE EDITING LET'S SAY IN THESE VIDEOS TO TELL YOUR STORY. HOW DO YOU RESPOND TO THAT?

ACKMAN: THERE'S NO SELECTIVE EDITING AT ALL. WE HAVE ALL THE SOURCE MATERIAL. WE PROVIDED IT TO THE GOVERNMENT. THE GOVERNMENT CAN -- IF PEOPLE WOULD WATCH A TWO HOUR LONG WEBINAR WE'D RELEASE THOSE AS WELL AS. THIS IS NOT SELECTIVE. WHAT'S ACTUALLY INTERESTING IS YOU CAN'T FIND ON THE WEB AND THERE ARE THOUSANDS OF THESE VIDEOS ON THE WEB, THERE'S NOT ONE OF A HERBALIFE DISTRIBUTOR TALKING TO HIS RECRUITS ABOUT HOW TO SELL THE PRODUCT, ABOUT HOW TO MAKE A RETAIL SALE OF AN HERBALIFE PRODUCT. IT'S ALL ABOUT HOW TO RECRUIT PEOPLE TO BECOME DISTRIBUTORS BECAUSE THAT'S THE ONLY WAY YOU CAN MAKE MONEY. THE POINT WE'RE MAKING WITH THESE VIDEOS IS THE PROBLEM WITH HERBALIFE THEY HIRED A FORMER FTC COMMISSIONER TO MAKE A SPLASH ABOUT HAVING A REAL COMPLIANCE DEPARTMENT. THE PROBLEM ISN'T THE COMPLIANCE DEPARTMENT AS MUCH OF A JOKE AS THE HERBALIFE COMPLIANCE DEPARTMENT IS THE INCENTIVES OF THE HERBALIFE MARKETING PLAN. THE ONLY WAY YOU CAN MAKE MONEY AT THE COMPANY, AND THAT'S A VERY SMALL FRACTION OF THE PEOPLE INVOLVED HERE, CERTAINLY WELL BELOW 1% OF THE DISTRIBUTORS, IS BY RECRUITING OTHER PEOPLE HEAVILY AND GETTING THEM TO INVEST THOUSANDS AND THOUSANDS OF DOLLARS. THAT'S THE ONLY HOPE YOU HAVE OF MAKING MONEY AND THAT'S BECAUSE OF HOW THE INCENTIVES AND MARKETING PLAN WORK. THE OTHER PROBLEM IS IT'S EFFECTIVELY IMPOSSIBLE TO SELL TONS OF WHITE POWDER IN A CANNISTER TO PEOPLE YOU DON'T KNOW. IT'S A VERY DIFFICULT BUSINESS MODEL PARTICULARLY WITH ALL OF THE DISTRIBUTORS BRING WILLING TO DUMP PRODUCT AT PRODUCT AT COST OR BELOW COST. SO THE INTERESTING QUESTIONS IS IT'S NOW JULY SO IT'S TWO MONTHS AFTER THEY SAID THEY WERE IN ADVANCED DISCUSSIONS ABOUT A POSSIBLE RESOLUTION WITH THE FTC, 5 MONTHS AFTER THEY MENTION IT FOR THE FIRST TIME. WHAT'S REALLY GOING ON IS THE GOVERNMENT IS TAKING THIS INCREDIBLY SERIOUSLY AND THE ONLY THING I THINK THE GOVERNMENT UNDERSTANDS WHAT WE UNDERSTAND IF YOU DON'T CHANGE THE INCENTIVES OF THE MARKETING PLAN AND GET RID OF THE INVENTORY LOADING INCENTIVES AND THE REQUIREMENT TO BUY THOUSANDS OF DOLLARS WORTH OF PRODUCT IN ORDER TO EARN ROYALTIES THERE'S NO WAY FOR HERBALIFE TO EFFECTIVELY MONITOR AND STOP THE ABUSE. WHY? BECAUSE INCENTIVES DRIVE HUMAN BEHAVIOR AND IF YOU DON'T CHANGE THE INCENTIVES THE BEHAVIOR ISN'T GOING TO CHANGE AND I THINK THAT'S WHY THIS THING HASN'T SETTLED.

WAPNER: THERE ARE A NUMBER OF THINGS WITHIN THAT. FIRST AND FOREMOST HERBALIFE HAS SEEN YOUR VIDEOS AND THEY KNEW YOU WERE GOING TO BE ON TODAY BY VIRTUE OF US PROMOTING YOUR APPEARANCE. THEY SENT ME THE FOLLOWING STATEMENT. I WANT TO READ IT AND GET YOUR REACTION TO IT. THIS IS A QUOTE FROM AN HERBALIFE SPOKESPERSON, IT'S BEEN THREE YEARS AND BILL HAS LOST HUNDREDS OF MILLIONS OF DOLLARS. HE ADMITTED IN A RECENT FORTUNE PIECE IT WAS COSTING MORE THAN $100 MILLION A YEAR IN CARRYING COSTS. WHEN IS IT TIME TO JUST SAY HE GAVE IT A VALIANT TRY BUT LIKE BORDERS, JCPENNEY, TARGET HE WAS JUST MISINFORMED. THAT FROM A HERBALIFE SPOKESPERSON.

ACKMAN: IT DOESN'T COST US $100 MILLION A YEAR. THE COST TO CARRY THE POSITION IF WE WERE $1 BILLION SHORT TODAY. THE COST TO BORROW IS ABOUT 2% THERE'S A DIVIDENT SO IT'S PROBABLY $20 MILLION. THAT'S REAL MONEY IT IS NOT $100 MILLION. IT'S INTERESTING HERBALIFE IS TRYING TO GET US TO GO AWAY AND STEER THE FOCUS FROM THE FACTS. THE FACTS HERE ARE THE NUMBER THAT HERBALIFE IS THROWN OUT $200 MILLION SETTLEMENT NUMBER FORGET THE INJUNCTIVE RELIEF PART. I THINK THAT WOULD BE THE LARGEST CONSUMER PROTECTION FINE EVER COLLECTED BY THE FEDERAL TRADE COMMISSION. SO CLEARLY THEY'VE DONE A LOT OF THINGS WRONG HERE AND THAT'S WHAT THEY WOULD BE WILLING TO PAY IN A MUTUAL RESOLUTION. THAT'S NOT WHAT THE GOVERNMENT IS WILLING TO ACCEPT. THAT'S WHAT THEY HAVE APPARENTLY THROWN OUT AS A NUMBER THEY'RE WILLING TO PAY. THE REALITY HERE IS THIS IS NOT GOING TO BE ABOUT A DOLLAR AMOUNT THAT HERBALIFE PAYS TO THE GOVERNMENT TO RESOLVE THIS. THE ONLY WAY THIS THING GETS RESOLVED IN MY OPINION IS IF HERBALIFE MAKE MATERIAL CHANGES TO THEIR INCENTIVE STRUCTURE TO STOP THE INCENTIVES TO RECRUIT AND MY GUESS IS THAT'S WHAT THE GOVERNMENT IS PUSHING FOR. HERBALIFE REALIZES IT CAN'T ACCEPT THOSE CHANGES OR THEY'LL GO BANKRUPT BECAUSE NO IS ACTUALLY BUYING THE PRODUCT YOU CAN'T MAKE MONEY SELLING THE PRODUCT AT RETAIL. THIS IS GOING TO END UP WITH THE GOVERNMENT SUING HERBALIFE FOR BEING A PYRAMID SCHEME OR HERBALIFE CAPITULATING AND AGREEING TO CHANGES. AND IN EITHER CIRCUMSTANCE THE STOCK IS NOT GOING TO BE $60 A SHARE AND TRADING AT 14.5X EARNINGS. THAT'S WHY CERTAINLY WE'VE BEEN A PATIENT INVESTOR HERE, I THINK THIS IS THE MOST ATTRACTIVE HERBALIFE HAS BEEN FROM A RISK REWARDS STANDPOINT AND THAT'S WHY WE'VE STAYED SHORT. AND IF WE FELT IT WASN'T AN ATTRACTIVE INVESTMENT WE WOULD HAVE COVERED A LONG TIME AGO.

WAPNER: UNDERSTOOD LOOK IT'S BEEN A PAINFUL INVESTMENT. TO THIS POINT THERE'S SORT OF NO GETTING AROUND THAT. AS YOU SAID THE STOCK IS SITTING RIGHT AT $60 A SHARE. DO YOU THINK -- I WAS THINKING ABOUT THIS AND NOT THAT I'VE SPOKEN WITH ANY OF YOUR INVESTOR INVESTORS, I CAN'T SAY I HAVE A VIEW FROM ANY OF THEM, BUT HAVE YOU EVER THOUGHT DO YOUR INVESTORS WANT YOU TO CONTINUE WITH THIS FIGHT OR DO YOU THINK SOME OF THEM SAY LET'S JUST MOVE ON, FIND SOMETHING ELSE?

ACKMAN: YEAH, THE GOOD NEWS HERE IS IT DOESN'T ACTUALLY CONSUME A LOT OF OUR RESOURCES. I JOKE ABOUT GOING INTO THE MOVIE PRODUCTION BUSINESS BUT ELIZABETH MANN AND FRAN MCGILL AT PERSHING SQUARE HAVE A LITTLE BIT OF SOFTWARE AND THE BEAUTY OF TECHNOLOGY AND JUST THOUSANDS OF HOURS OF FOOTAGE THEY PUT TOGETHER A FIVE MINUTE CLIP EVERY DAY AND IT'S A FUN ACTIVITY FOR THEM AND IT MAKES A VERY VERY IMPORTANT POINT ABOUT HOW PERVASIVE THE FRAUD IS AND HOW IT CONTINUES RIGHT UNDER THE NOSE OF THE GOVERNMENT EVEN IN THE MIDST OF A SETTLEMENT. I THINK THAT'S A USEFUL EXERCISE. I THINK ALL OUR INVESTORS WOULD LOVE FOR THING TO BE RESOLVED AND FRANKLY I THINK THE -- WE WOULD CERTAINLY LIKE THIS TO BE RESOLVED SOON AND I THINK WE'RE QUITE CLOSE. IT'S HERBALIFE THAT'S SAID THEY'RE IN ADVANCED DISCUSSIONS ABOUT A POTENTIAL RESOLUTION BUT THEY ALSO SAY THAT IF THEY CAN'T, IF NO ASSURANCES CAN BE GIVEN THEY'RE GOING TO – THIS THING IS GOING TO BE RESOLVED IN A NEGOTIABLED SETTLEMENT AND I THINK THE GOVERNMENT WILL ONLY NEGOTIATE SO LONG. AT SOME POINT THE GOVERNMENT WILL HAVE TO BRING A LAWSUIT HERE AND THEY BRING A LAWSUIT ACCUSING HERBALIFE OF BEING A PYRAMID SCHEME I THINK THE COMPANY IS DONE.

WAPNER: WHAT IF SOMEONE LOOKS AT THESE VIDEOS AGAIN 18 VIDEOS IN 18 DAYS AND THEY SAY ACKMAN IS TRYING TO UNFLUENCE IF NOT MANIPULATE THE FTC. HOW WOULD YOU RESPOND TO THAT?

ACKMAN: WE'RE PUTTING OUT VIDEOS OF HERBALIFE DISTRIBUTORS. IT'S NOT LIKE WE CREATED -- WE'RE NOT MAKING STATEMENTS ON BEHALF OF THE COMPANY. THE FACTS HERE SPEAK FOR THEMSELVES AND BY PROVIDING TRANSPARENCY WHAT'S ACTUALLY GOING ON WHAT'S INTERESTING IS WHAT'S HAPPENED OVER THE LAST SEVERAL YEARS IS THE HERBALIFE DISTRIBUTORS USED TO BE MORE OVERT ABOUT DEFRAUDING PEOPLE AND NOW THEY'VE GOTTEN MORE SOPHISTICATED IN USING TECHNOLOGY AND THEY'RE DOING THESE ONLINE WEBINARS AND I REALLY ENCOURAGE PEOPLE TO WATCH THE VIDEOS. MANY OF THEM PASSWORD PROTECTED AND THEY SUCK YOU INTO A MONEY MAKING OPPORTUNITY ON THE WEB. THEY DON'T TELL YOU IT'S HERBALIFE AND THEN THEY VERY QUIETLY HAVE BEEN GOING ABOUT MAKING THESE STATEMENTS AND RECRUITING PEOPLE. MY SUSPICIONS HERBALIFE IS THEY EFFECTIVELY ENCOURAGED THEM OR EFFECTIVELY PUSHED THIS UNDERGROUND BUT THE REALITY IS THE FRAUD CONTINUES. I THINK BY OUTING THESE TOP DISTRIBUTORS OF THE LAST 18 I THINK THREE OR FOUR OF THEM HERBALIFE RECENTLY BROUGHT DOWN TO WASHINGTON, D.C. TO MAKE THEIR CASE THEY'RE A LEGITIMATE COMPANY. THE PEOPLEWE HAVE IN THESE VIDEOS AND I ENCOURAGE YOU TO WATCH THEM, SO IT'S NOT OUR WORDS, IT'S THE DISTRIBUTORS WORDS, THESE ARE THE SAME DISTRIBUTORS THAT WENT AND MET WITH SENATORS AND CONGRESSMEN FROM THEIR COMMUNITIES TALKING ABOUT HOW GREAT HERBALIFE IS AND WHAT A WONDERFUL COMPANY IT IS AND HOW EVIL SHORTSELLERS ARE THE REALITY IS THE VERY SAME PEOPLE ARE SAYING HOW ANYONE CAN MAKE TENS OF THOUSANDS AND EVEN MILLIONS OF DOLLARS IN THIS PYRAMID SCHEME.

WAPNER: THERE IS AN FTC, FROM WHAT I UNDERSTAND, AN FTC – I GUESS WHAT THEY CALL A CLOSED DOOR SESSION THIS AFTERNOON. HAVE NO IDEA OBVIOUSLY IF HERBALIFE IS SCHEDULED TO BE DISCUSSED TODAY OR NOT, BUT IT'S OF YOUR THINKING THAT YOU THINK A RESOLUTION IS COMING SOON?

ACKMAN: LOOK, I DON'T KNOW HOW LONG – YOU KNOW, AGAIN, I'M RELYING REALLY MORE ON WHAT HERBALIFE HAS DISCLOSED, WHICH YOU KNOW, IN THE SEC FILING THEY'VE SAID THAT THEIR – THEY'VE BEEN SAYING NOW FOR ALMOST SIX MONTHS THAT THEY'RE CLOSE TO A POTENTIAL RESOLUTION, BUT THEY ALSO SAY – AND THE OTHER ALTERNATIVE IS THAT – SAYS THE COMPANY IS CURRENTLY IN DISCUSSIONS. HOLD ON, HERE'S THE LATEST WORDS.

WAPNER: NO, I HAVE IT RIGHT IN FRONT OF ME FROM THEIR FILING AND THAT WAS THAT THE DISCUSSIONS HAVE PROGRESSED, AND I'M QUOTING HERE FROM THAT FILING. "DISCUSSIONS HAVE PROGRESSED TO AN ADVANCED STAGE. THE RANGE OF OUTCOMES NOW INCLUDE LITIGATION OR SETTLEMENT. WE ALSO ANNOUNCED THAT IF A SETTLEMENT IS REACHED WITH THE FTC, IT WOULD LIKELY INCLUDE INJUNCTIVE AND OTHER RELATES – AS WELL AS A MONETARY PAYMENT WITH OUR BEST ESTIMATE OF THAT PAYMENT BEING $200 MILLION."

ACKMAN: AND THEY ALSO SAY IF DISCUSSIONS WITH THE FTC DO NOT CONTINUE TO PROGRESS, IT'S LIKELY THAT LITIGATION WOULD ENSUE. AND I GUESS MY INTERPRETATION OF THAT IS THAT STATEMENT WAS MADE ON MAY 5th. IT'S NOW MORE THAN TWO MONTHS LATER. IT DOESN'T SEEM TO ME LIKE A LOT OF PROGRESS HAS BEEN MADE. I MEAN, HOW LONG DOES IT TAKE TO NEGOTIATE? YOU KNOW, IF THERE WAS A SETTLEMENT THAT HERBALIFE COULD ACCEPT, THEY WOULD HAVE ACCEPTED IT ALREADY. SO, I MEAN, IT'S VERY CLEAR THAT THE GOVERNMENT IS APPROPRIATELY HOLDING THE LINE AT WHAT THEY'RE WILLING TO ACCEPT AND HERBALIFE IS MAYBE MAKING WHATEVER CASE IT CAN, BUT AT SOME POINT THE GOVERNMENT IS GOING TO PULL THE TRIGGER ON LITIGATION AND I THINK THAT'S ACTUALLY GOING TO BE THE BEST OUTCOME HERE.

WAPNER: WELL, LET ME ASK YOU A QUESTION. LET ME END ON THE HERBALIFE PART OF OUR CONVERSATION BY WHAT HAPPENS IF YOU'RE WRONG? WHAT HAPPENS IF THERE IS A SETTLEMENT? WHAT HAPPENS IF IT IS IN THAT MONETARY BALLPARK, WE COULD CALL IT, OR AT LEAST SOMEWHERE CLOSE? WHAT DO YOU DO NEXT?

ACKMAN: SURE. SO THINK ABOUT IT THIS WAY. THE LAST TIME THE FTC HAD A MEANINGFUL SETTLEMENT I THINK IT WAS THIS LIFELOCK SCAM AND THAT WAS A $100 MILLION FINE. AND WHAT THE FTC DOES WHEN THEY DEAL WITH ONE OF THESE SCAMS AND THEY COME TO ONE OF THESE SETTLEMENTS IS THEY HOLD A PRESS CONFERENCE. THEY ANNOUNCE A PRESS CONFERENCE, THEY ANNOUNCE $100 MILLION FINE AND THEY EXPLAIN WHY THE FTC SOUGHT THE FINE. AND SO IMAGINE THERE'S A PRESS RELEASE TOMORROW FROM THE FTC, THEY SAY THEY'RE HOLDING A PRESS CONFERENCE, THE COMMISSIONER GETS UP, YOU KNOW, OFTEN A COUPLE OF ATTORNEY GENERALS WORK ALONGSIDE THE FTC AND THEY SAY WE ARE NOW PUNISHING HERBALIFE WITH THE LARGEST CONSUMER PROTECTION FINE IN THE HISTORY OF THE FEDERAL TRADE COMMISSION'S CONSUMER PROTECTION DIVISION. NUMBER ONE, THEY'RE GOING TO EXPLAIN HERE ARE ALL THE EVIL ACTS THIS COMPANY HAS DONE THAT HAVE LED US TO CHARGE THE HIGHEST FINE WE HAVE EVER CHARGED – AND I THINK IT IS GOING TO BE MORE THAN $200 MILLION – THAT IS HERBALIFE'S NUMBER. AND THEN, HERE ARE THE STEPS THE FTC IS TAKING TO MAKE SURE THAT CONSUMERS ARE NOT DEFRAUDED AGAIN. AND THEY'RE GOING TO HAVE TO ANNOUNCE WHATEVER THOSE STEPS ARE AND HOW THOSE STEPS ARE GOING TO BE ENFORCED. IT'S GOING TO BE SOMETHING – MY GUESS IS IT IS GOING TO BE ONE OF ONE THE MOST WATCHED PRESS CONFERENCES IN THE HISTORY OF THE FTC.

WAPNER: I WOULDN'T DOUBT THAT.

ACKMAN: SO MY POINT HERE IS THE FTC IS NOT GOING TO – I CAN'T SEE ANY SCENARIO IN WHICH THAT'S GOING TO BE GOOD FOR HERBALIFE. AND THEY'RE JUST GOING TO BE ALLOWED TO CONTINUE TO GO ABOUT THEIR BUSINESS. AGAIN, WE'VE YET TO FIND ONE VIDEO ON THE WEB OF A DISTRIBUTOR TALKING ABOUT HOW TO SELL THE PRODUCT AT RETAIL TO A CONSUMER. EVERY DISTRIBUTOR PRESENTATION, WHETHER IT TAKES PLACE IN A HOTEL ROOM OR WHETHER IT TAKES PLACE IN A WEBINAR, IS ABOUT HOW TO RECRUIT OTHERS SO YOU CAN GET YOUR CHECK AND RETIRE YOUR PARENTS AND BUY A HOME FOR YOUR KIDS. IT'S NOT ABOUT RETAIL SALES. AND THE COMPANY IS A PYRAMID SCHEME. IF RECRUITING IS EFFECTIVE – MORE DOMINANT THAN RETAIL SALES. AND THAT IS A CERTAINTY FOR HERBALIFE.

WAPNER: HAVE YOU EVER CONSIDERED, AND WE WILL MAKE SERIOUSLY THIS THE LAST HERBALIFE QUESTION AT LEAST. HAVE YOU EVER CONSIDERED WHAT MAY HAPPEN AFTER THIS IS ALL RESOLVED? AND YOU REMEMBER THOSE RUMORS AND SPECULATION AS MUCH AS I DO SOME YEARS AGO SINCE THIS WHOLE THING STARTED WHETHER HERBALIFE WOULD EVEN REMAIN A PUBLICLY TRADED COMPANY FOR THE DURATION. HAVE YOU THOUGHT ABOUT THE POSSIBILITY OF ONCE THIS IS RESOLVED WITH THE GOVERNMENT OF HERBALIFE BEING TAKEN OUT, BEING TAKEN PRIVATE, WHAT THAT COULD MEAN FOR YOUR POSITION?

ACKMAN: I REMEMBER, AGAIN, I FEEL VERY GOOD ABOUT OUR INVESTMENT. I THINK NO PRIVATE EQUITY FIRM IS GOING TO BUY THIS COMPANY. LOOK, EVEN IF YOU THOUGHT IT WAS A LEGITIMATE BUSINESS, THEY RECRUIT 2 MILLION DISTRIBUTORS A YEAR AND THEY LOSE 2 MILLION DISTRIBUTORS A YEAR. AND THAT IS NOT A BUSINESS WITH A VERY STABLE CUSTOMER BASE. IT IS NOT A BUSINESS YOU WANT TO PUT A LOT OF LEVERAGE ON AND TAKE PRIVATE. AND THIS WOULD ACTUALLY BE, YOU KNOW, ANYTHING NEAR THE CURRENT SHARE PRICE OR A PREMIUM WOULD BE A BIG PRIVATE EQUITY DEAL. IT WOULD REQUIRE A VERY BIG PRIVATE EQUITY CHECK AND BELIEVE ME IF THAT SHOULD HAVE HAPPENED WOULD HAVE HAPPENED A LONG TIME AGO.

WAPNER: SO LET ME MOVE –

ACKMAN: NEXT TOPIC.

WAPNER: LET ME MOVE ON TO VALEANT BECAUSE CERTAINLY THAT IS THE TOPIC DU JOUR OF AT LEAST THE LAST COUPLE OF DAYS AT MINIMUM. OUR STORY YESTERDAY, WHICH WE FIRST REPORTED HERE, WAS NEAR $5 MILLION SHARE SALE BY THE FORMER CEO, MICHAEL PEARSON. NETTED CLOSE TO $100 MILLION. YOU'RE ON THE BOARD OF THE COMPANY. WHAT'S YOUR RESPONSE TO THAT SALE BY MR. PEARSON?

ACKMAN: LOOK, IT'S KIND OF SAD. THE WHOLE THING IS SAD AND THE WHOLE THING IS SAD FOR MIKE. IF YOU REMEMBER, WHEN THE STOCK FIRST DROPPED, YOU KNOW, MIKE IS A GUY THAT BOUGHT VALEANT STOCK AND NEVER SOLD IT. AND THEN WHEN THE STOCK COLLAPSED, HE HAD MARGIN STOCK TO MAKE A $50 MILLION CHARITABLE DONATION TO DUKE UNIVERSITY AND WHEN THE STOCK COLLAPSED, HE GOT A MARGIN CALL FROM GOLDMAN SACHS AND HE WAS SOLD OUT OF A BIG CHUNK OF HIS POSITION. NOW THE UNFORTUNATE THING IS WHEN YOU BUY STOCK AT A LOW PRICE, IT RUNS UP TO A VERY HIGH PRICE, YOU BORROW MONEY AGAINST THAT POSITION AND THEN THE STOCK COLLAPSES AND YOU GET SOLD OUT. YOU KNOW, GOLDMAN SACHS SELLS ENOUGH STOCK TO PAY OFF YOUR MARGIN LENDER, IT SELLS OFF ENOUGH STOCK TO PAY OFF THE LOAN, BUT THEY DON'T SELL ENOUGH STOCK FOR YOU TO PAY YOUR TAXES ON THAT GAIN. AND MY UNDERSTANDING, BASED ON A PRESS RELEASE THE COMPANY PUT OUT TODAY IN A STATEMENT FROM MIKE PEARSON, IS THAT THE OPTION EXERCISE AND – YOU KNOW, WHICH ITSELF IS TAXABLE, THE NET PROCEEDS AFTER TAX FROM THAT SALE WERE USED TO PAY THE TAXES ON THE SALE – THE FIRST POSITION I THINK HE GOT SOME NET PROCEEDS, BUT MIKE IS PROBABLY NOT LIKELY TO BE RUNNING FORWARD WITH A NEW JOB SOON. SO I THINK IT'S KIND OF SAD HE WAS FORCED TO SELL OUT AT THIS PRICE.

WAPNER: THEY SAY IN A STATEMENT TODAY, VALEANT DOES, AND THEY DO HAVE A QUOTE FROM MR. PEARSON. SAYS THE FOLLOWING. "I CONTINUE TO BELIEVE IN VALEANT, JOE" AS IN JOE PAPA THE NEW CEO, "AND THE REST OF THE MANAGEMENT TEAM. WHILE I'M TRIMMING MY OWNERSHIP POSITION FOR PERSONAL REASONS, I PLAN ON HOLDING MY REMAINING SHARES UNTIL THE COMPANY RECOVERS AND RETURNS TO BEING TRADED ON FUNDAMENTALS." THE ANALYSTS DAVID MARIS OVER AT WELLS FARGO SAID, "AS THE OUTGOING CEO, WE PRESUME PEARSON HAD INSIGHT INTO THE STATE OF THE BUSINESS AND WE CONSIDER THE SELLING AS A NEGATIVE SIGN." WHY SHOULDN'T THE MARKET VIEW MR. PEARSON GETTING OUT AS A NEGATIVE SIGN?

ACKMAN: BECAUSE I THINK MIKE WAS FORCED TO SELL. THE GOVERNMENT UNFORTUNATELY DOESN'T WAIT FOR YOU TO PAY YOUR TAXES. BUT LOOK, I THINK THE COMPANY IS GOING TO HAVE AN EARNINGS CALL, I THINK, AT THE EARLY PART OF AUGUST. JOE WILL HAVE BEEN AT THE COMPANY FOR ABOUT THREE MONTHS.THAT CERTAINLY IS A SUFFICIENT PERIOD OF TIME FOR HIM TO CLARIFY WHAT THE STRATEGY IS GOING FORWARD. I THINK, THE STOCK STILL SUFFERS A LOT FROM UNCERTAINTY. OBVIOUSLY THERE'S BEEN A PRETTY BIG OVERHANG. BIG SHAREHOLDERS SOLD OUT THEIR ENTIRE POSITION. YOU KNOW, MIKE'S SOLD A BUNCH OF STOCK. AND I THINK NEW INVESTORS – YOU KNOW, THERE'S STILL A LOT TO BE CLARIFIED ABOUT THE STORY. SO I THINK JOE WILL BE VERY PREPARED FOR THAT CONFERENCE CALL. JUST TO GIVE YOU A COUPLE OF ITEMS, A LOT OF QUESTIONS WE'VE BEEN GETTING FROM INVESTORS AND OTHER PEOPLE, YOU KNOW, WHY HASN'T THE COMPANY SOLD ASSETS, SHOULDN'T THE COMPANY BE SELLING ASSETS TO PAY DOWN DEBT. AND THE ANSWER IS THAT VALEANT DOESN'T OWN A SECURITIES PORTFOLIO THAT YOU CAN LIQUIDATE OVERNIGHT. IT OWNS – IT IS FORTUNATE IN HAVING A VERY LONG CAPITAL STRUCTURE. SO THERE IS NO NEED TO FIRE SALE ASSETS. SINCE WE JOINED THE BOARD OF THE OCMPANY, AND RECENT EVENTS HAVE TRANSPIRED, THE PHONE IS LITERALLY RINGING OFF THE HOOK FROM STRATEGIC BUYERS WHO WANT TO BUY SOME OF THE NON-CORE ASSETS THE COMPANY IS OPEN TO SELLING. A NUMBER OF ANALYSTS SAID LOOK, IT'S NOT GOING TO DO VALEANT ANY GOOD TO SELL A FEW HUNDRED MILLION DOLLARS WORTH OF ASSETS. AND I THINK ONE OF THE INTERESTING THINGS HERE IS ONE OF THE THINGS MIKE WAS VERY GOOD IS IDENTIFYING AND ACQUIRING VERY GOOD ASSETS. AND VALEANT HAS A VERY DIVERSIFIED PORTFOLIO OF ASSETS AND THEY ARE LITERALLY – THERE'S $10 BILLON WORTH OF STUFF I WOULD SAY THAT MOST SHAREHOLDERS DON'T EVEN KNOW EXIST THAT I WOULD CERTAINLY DEFINE AS NON-CORE. AND YOU KNOW, I THINK JOE WILL PROVIDE MORE CLARITY BUT THE COMPANY CAN, I THINK, VERY COMFORTABLY SELL LITERALLY BILLIONS OF DOLLARS OF ASSETS WITHOUT EFFECTING ANY OF THE CORE FRANCHISES OF THE COMPANY. AND I THINK, YOU KNOW, THAT'S NOT GOING TO HAPPEN OVERNIGHT. BUT THE COMPANY HAS HIRED BANKERS, BOOKS ARE BEING PUT TOGETHER. THOSE ASSETS WILL BE SHOWN TO INTERESTED BUYERS AND MY GUESS IS SOMETIME AROUND YEAR END THE COMPANY WILL START ANNOUNCING FAIRLY SIGNIFICANT ASSET SALES. SO THE COMPANY WILL DELEVER. JOE IS WORKING TO FIX THE DERMATOLOGY BUSINESS. WALGREENS IS VERY INTERESTED IN FIXING THAT DISTRIBUTION CHANNEL BECAUSE I THINK WALGREENS WOULD LOVE TO DO A VALEANT DEAL WITH OTHER DRUG COMPANIES. AND IF THE VALEANT DEAL IS NOT PERFORMING THE WAY IT SHOULD BE, IT IS NOT GOOD FOR WALGREENS, IT IS NOT GOOD FOR VALEANT, OBVIOUSLY. I THINK JOE IS GOING TO GET THAT FIXED. HE'S MADE A LOT OF PROGRESS. I THINK HE'S STARTED TO MAKE PROGRESS ON THE SALES FORCE AND MAKING SURE THOSE PRODUCTS ARE DOING WHAT THEY SHOULD. SO I THINK, MY EXPERIENCE WITH HIM OVER THE LAST COUPLE OF MONTHS IS INCREDIBLY UNFLAPPABLE, HARD WORKING, FOCUSED, STRONG OPERATOR AND I THINK HE'LL HAVE A LOT OF GOOD STUFF TO REPORT TO PEOPLE ABOUT PROGRESS, PLANS, ET CETERA AND THEN THIS WILL START TO BECOME A STOCK PEOPLE CAN OWN ONCE THEY KNOW WHAT THE PLANS ARE GOING FORWARD.

WAPNER: AND YOU'RE STICKING TO WHAT YOU TOLD ME PRIOR ON THIS VERY PROGRAM THAT THERE ARE NO PLANS AT THIS POINT TO SELL CORE ASSETS LIKE BAUSCH AND LOMB?

ACKMAN: THAT'S RIGHT. BAUSCH + LOMB HAS A VERY LOW TAX BASIS RELATIVE TO WHAT WE BELIEVE IT'S WORTH. WE THINK IT'S A GREAT FRANCHISE. WE THINK IT'S A FRANCHISE YOU BUILD ON AND YOU KNOW, IT'S REALLY THE CORE OF THE COMPANY. YOU COULD CERTAINLY ENVISION A DAY WHERE THE COMPANY SOLD OFF A LOT OF NON-CORE ASSETS, THE BUSINESS WAS A MORE FOCUSED BUSINESS AND BAUSCH + LOMB BECOMES AN EVEN MORE DOMINANT PART OF THE FRANCHISE AND – IN THE COMPANY BAUSCH + LOMB. I THINK IT'S MORE AN ASSET AND A COMPANY YOU BUILD VALEANT AROUND THAN AN ASSET YOU WOULD WANT TO SELL. ON AN AFTER TAX BASIS, IT WOULD BE A VERY INEFFICIENT SALE.

WAPNER: ANDREW LEFT YESTERDAY OF CITRON RESEARCH, YOU REFERENCED SEQUOIA, WHICH AT ONE POINT WAS THE LARGEST SHAREHOLDER IN VALEANT SELLING OUT OF THEIR ENTIRE POSITION. MR. LEFT WHO SAID HE HAS PUT ON A NEW SHORT POSITION AS A SHORT-TERM TRADE SAID, "IT'S OBVIOUS IT'S A ZERO NOW." YOU'RE RESPONSE.

ACKMAN: LOOK, I THINK ANDREW LEFT IS A CHARISMATIC GUY. AND HE MADE ONE OF THE GREAT SHORT CALLS, I THINK, EVER. I GIVE HIM ENORMOUS CREDIT FOR THAT. AND THEN HE MADE A LONG CALL ON VALEANT AND THEN HE MADE – NOW HE'S MADE A SHORT CALL ON VALEANT. WHAT I FIND INTERESTING IS HE NEVER TELLS YOU WHAT HE DOES WITH HIS POSITION. SO OBVIOUSLY, HE PUTS THE TRADE ON. HE GOES ON CNBC SAYS IT'S A SHORT, THEN HE COVERS AND THEN HE PUTS THE POSITION – BUYS SOME CALLS OR GOES LONG THE STOCK AND THEN HE GOES ON TV AND SAYS IT'S A LONG, WHICH HE DID, I DON'T KNOW, MAYBE A MONTH OR TWO AGO. AND THEN I GUESS YESTERDAY IT'S SHORT AGAIN. I JUST FEEL LIKE YOU GUYS ARE DOING A VERY GOOD JOB HELPING HIM MAKE MONEY ON HIS PORTFOLIO. I'M NOT SURE IT'S GOOD FOR INVESTORS. IF HIS REASON FOR GOING SHORT IS THAT MIKE PEARSON SOLD THE STOCK TO PAY TAXES OR SEQUOIA EXITED, I DON'T THINK THOSE ARE GOOD REASONS. I THINK THE UNDERLYING FRANCHISES HERE ARE STRONG. THERE'S CLEARLY BEEN BUSINESS DISRUPTION AS A RESULT OF RECENT EVENTS, BUT I THINK WE HAVE A VERY STRONG CEO WHOSE, I THINK, CORE COMPETENCIES INCLUDE FIXING THOSE PROBLEMS AND THE COMPANY GENERATES CASH EVERY DAY AND THAT CASH WILL BE USED TO DELEVER THE BUSINESS. THE MULTIPLE AT WHICH THE STOCK TRADES AT DOESN'T CHANGE. JUST THE DELEVERAGING OF THE COMPANY YOU'RE GOING TO MAKE A LOT OF MONEY AT THE CURRENT SHARE PRICE. SO LOOK, IT'S NOT WITHOUT RISK, BUT WE THINK JOE'S DOING A VERY GOOD JOB AND I THINK HE'LL HAVE A LOT MORE TO REPORT IN A FEW WEEKS TO INVESTORS, WHICH I THINK WILL HELP GET PEOPLE COMFORTABLE. ANY WAY, I GOT TO RUN. IT WAS SUPPOSED TO BE TEN MINUTES.

WAPNER: I KNOW YOU DO. LET ME ASK YOU LASTLY BEFORE I LET YOU GO BECAUSE MONDELEZ IS A BIG POSITION FOR YOU AS WELL AND IT IS IN THE NEWS REGARDING THE HERSHEY BID WHICH WAS TURNED DOWN. DOES THAT DEAL ULTIMATELY HAPPEN AND HOW MUCH DO YOU THINK MONDELEZ SHOULD PAY IF IN FACT IT CAN HAPPEN?

ACKMAN: I WOULD LEAVE THAT UP TO MONDELEZ AND THEIR BOARD. I THINK THEY HAVE A SMART BOARD OF DIRECTORS AND WE'LL LET THEM FIGURE THAT OUT.

WAPNER: WE WILL LEAVE IT THERE. BILL, THANKS FOR CALLING IN. I APPRECIATE YOUR TIME TODAY.

ACKMAN: THANK YOU VERY MUCH.

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