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Bill Ackman Comments on Platform Specialty Products Corp

- By Holly LaFon

Platform (PAH)'s shares increased 8% during the quarter, but are still well below the highs reached earlier this summer shortly after the company announced an agreement to sell its agricultural business to a strategic acquirer in an all-cash transaction. While management has recently reaffirmed that they remain on track to close the sale at, or shortly after, the end of the year, we believe that investors are not yet valuing Platform's shares based upon the future earnings potential of its remaining business, Performance Solutions. We believe that few investors today are willing to consider an investment in Platform until the sale transaction closes, and the company pays down debt.

Performance Solutions is a high -quality business with a strong competitive position in secularly growing end markets which will operate with significantly less financial leverage than Platform has today. Based on analyst estimates for the remaining business, Platform's shares trade at less than 12 times next year's earnings, a large discount to competitors. We believe the closing of the sale will simplify Platform's business portfolio, meaningfully reduce financial leverage, provide capacity for large share repurchases, and serve as a catalyst for future share price appreciation.

From Bill Ackman (Trades, Portfolio)'s third-quarter 2018 Pershing Square shareholder letter.
This article first appeared on GuruFocus.