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Bill Ackman Comments on Platform Specialty Products

Platform Specialty Products ( NYSE:PAH )

During the third quarter, PAH's share price declined 51%. While there were several developments at the company which contributed to the decline in the share price, many companies that have been highly acquisitive or compete in the agricultural chemicals industry also experienced significant share price declines during the quarter. For example, highly acquisitive companies such as XPO Logistics, Altice, and Colfax each exhibited share price declines of between 35% and 47% during the quarter, and the share price of FMC, PAH's closest agricultural peer, declined 35% during the same period.

During the last several months, PAH announced the resignation, hiring, and promotion of several key executive roles. In August, Wayne Hewett, former President and head of the agricultural solutions business, left the company. In October, Dan Leever, the CEO of PAH, resigned. Dan stated that his resignation occurred due to disagreements with Chairman Martin Franklin regarding management style and the cultural integration of acquired companies. PAH also recently hired a new CFO, Sanjiv Khattri, and promoted its former head of corporate development, Ben Gliklich, to COO. On an investor call in October, Martin reiterated his commitment to PAH and explained that his involvement with the company will be even greater than it has been in the past. Martin and other members of the board and management have made substantial stock purchases in recent weeks.

PAH has reduced its EBITDA guidance twice in 2015. In August, the company reduced 2015 EBITDA guidance by approximately 5% from its initial guidance in March. In October, PAH further reduced its 2015 EBITDA guidance by an additional 12%. The company has explained that the primary drivers of the guidance reductions are worsening foreign exchange rates and a change in distribution strategy in the agricultural solutions business to realign inventory levels to more closely match underlying demand.

During the quarter, the company provided additional details regarding the financing for its pending acquisition of Alent. In October, PAH reiterated that it had obtained an underwritten commitment for long-term debt financing at what it believes to be competitive market rates for the $1.8 billion cash portion of the purchase price. In addition, the company clarified that it does not need to issue additional equity to finance the closing of the Alent acquisition. On December 1st, Platform completed its acquisition of Alent.

While Platform is clearly a work in progress, we have a high degree of confidence in Martin Franklin and his team. Yesterday, Martin's largest holding, Jarden Corp., where he has served as Executive Chair, agreed to be acquired by Newell Rubbermaid. Under Martin's leadership, Jarden's stock price has increased approximately 50 times. Martin will be stepping down as Executive Chair, but will remain on the board of the merged company. We view this sale as favorable for Platform and Nomad Foods as he will now be able to devote more of his time to these companies.

From Bill Ackman ( Trades , Portfolio )'s Pershing Square Holdings third quarter 2015 letter to shareholders.About GuruFocus: GuruFocus.com tracks the stocks picks and portfolio holdings of the world's best investors. This value investing site offers stock screeners and valuation tools. And publishes daily articles tracking the latest moves of the world's best investors. GuruFocus also provides promising stock ideas in 3 monthly newsletters sent to Premium Members .

This article first appeared on GuruFocus .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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