Valeant Hiring Paul Herendeen as New CFO

Valeant Pharmaceuticals is expected to announce it has hired Paul Herendeen as its new CFO. ENLARGE
Valeant Pharmaceuticals is expected to announce it has hired Paul Herendeen as its new CFO. Photo: Bryan Anselm for The Wall Street Journal

Valeant Pharmaceuticals International Inc. is expected to announce it has hired Paul Herendeen as its new chief financial officer, luring the executive away from animal-health giant Zoetis Inc., ZTS 0.48 % according to sources close to the companies.

Mr. Herendeen, 60, would replace Robert Rosiello, who will remain with the Canadian pharmaceutical company as head of corporate development and strategy, according to the sources.

The hire, expected to be announced Monday morning, is a continuation of the shake-up at the embattled drugmaker. Valeant named a new general counsel earlier this month, expanded its executive committee and gave some of its senior executives bigger roles.

The company has been beset by months of turmoil. In April, it named Joseph Papa, a veteran drug industry executive, as its chairman and CEO, replacing longtime chief Michael Pearson.

Mr. Herendeen is expected to officially join the company Monday, following a summertime interview process that included lengthy conversations with Valeant’s Mr. Papa and Mr. Rosiello, said a source.

Mr. Herendeen will leave Zoetis, a company he came out of retirement to join two years ago. He shepherded the company through costs cuts, acquisitions and a brush with activist investor William Ackman, who bought into Zoetis in 2014.

Mr. Ackman is also an investor in Valeant and a board member, but sources said he didn’t speak directly with Mr. Herendeen about the move.

A spokesman for Zoetis declined to comment.

Mr. Herendeen is a veteran of the drug industry, and was also CFO of drugmaker Warner Chilcott PLC, which he helped sell to Actavis Inc. AGN 0.08 % in 2013.

Shares of Zoetis are up almost 50% since he joined. Valeant’s stock price, which traded above $ 260 a share last year, closed at $ 28.74 on Friday.

The company’s board brought in Mr. Papa—former CEO of Perrigo Co. PRGO 1.13 % –as Valeant shares plunged in value. The company’s strategy of acquiring drugs and raising their prices drew heavy scrutiny along with its accounting practices. Earlier this year, the company also had a close brush with defaulting on the terms of its debt due to a late annual-report filing.

But Mr. Papa has had some success in stabilizing the company.

He was able to convince lenders last week to amend terms on some of its debt and give the company some breathing room in its efforts at a turnaround. The company also earlier reaffirmed its earnings guidance for the year, while analysts upgraded their view of the stock. Mutual fund giant Fidelity has also sharply boosted its stake this year.

But the company is still struggling with the fallout from its accounting troubles. T. Rowe Price Group Inc. TROW -0.20 % filed a lawsuit against the company last week, alleging that Valeant engaged in “a fraudulent scheme” that cost shareholders billions of dollars.

The Wall Street Journal reported earlier this month that Federal prosecutors are investigating whether Valeant defrauded insurers by obscuring its ties to a mail-order pharmacy that boosted sales of its drugs.

Write to Vipal Monga at [email protected] US Business

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