Bill Ackman, Pershing Square CEO and Founder, spoke with Bloomberg Television’s Stephanie Ruhle and Erik Schatzker about his team’s two-year investigation of Herbalife Ltd. (NYSE:HLF) and the company’s alleged fraud. He also discussed his bid for Allergan, Inc. (NYSE:AGN).

Bill Ackman Pershing Square Allergan

Ackman said that he has spent “approaching $50 million” of investor money investigating Herbalife. He said: “Trust me, when you see the stuff we have tomorrow you will conclude that the money was well spent.”

He pointed to Enron as a hint to what will be revealed in tomorrow’s presentation: “The only clue I’ll give you for tomorrow is that Enron, if you remember, had a fake trading room. They were touring people around the Enron campus, I don’t remember if is an auditor or whatever, to talk about the trading operation. They actually set up work stations and had people sitting there looking like they were trading.”

Ackman said: “We have hundreds of hours of recorded conversation. This is stuff we’ve not yet turned over to the government. We will be doing that promptly after the presentation. But this is new material…The whole growth of the company in the last several years, the emphasis has been what they call daily methods of consumption in which the nutrition club is the biggest driver. And the nutrition club is a total and complete fraud.”

Highlights include:

*Frightened Allergan Will Make All-cash Acquistion Error

*Allergan ‘gave Its Best Shot Today’ On Restructure

*’Goal To Catalyze Regulatory Interest’ In Herbalife

*Tomorrow’s Herbalife Event Probes Nutrition Clubs

*Has Spent `approaching $50 Mln’ On Herbalife Probes

*Pershing Square Investors Fund Herbalife Probes

Ackman: We Spent Investors’ $50M Probing Herbalife

Herbalife’s Nutrition Club Is ‘Total Fraud’

Link: http://bloom.bg/1qYxH0S

STEPHANIE RUHLE: Bill, thanks so much for joining us. Why don’t we start with Allergan-Valeant? We have to ask, if your collective bid is so attractive, why haven’t the majority of the shareholders with 40 percent of the stock outstanding put pressure on the board to capitulate and accept you offer?

BILL ACKMAN: I think the answer is the board has turned a deaf ear to the shareholders and the board is not willing to engage with shareholders. The board is not even willing to engage with their largest shareholder. Unfortunately the board – the only authorized agent to speak with shareholders is the chairman and CEO David Pyott, and that’s from the – the lead independent – supposedly independent director who told me this.

RUHLE: But is it fair to call yourself simply the largest shareholder while you’re also part of a very hostile bid?

ACKMAN: Put me aside. If you talk to – what we’ve heard from other shareholders of the board is not willing to listen to them or speak to them. The only authorized person who’s handling this bid on behalf of Allergan is the chairman and CEO David Pyott, who would like to continue to run this company. And as a result, he’s got what we call a disabling conflict of interest. And the notion that David Pyott is leading this process is absurd. If you look at the Shire-AbbVie situation, the Shire chairman, who is a non-executive chairman, led the process. And that was entirely appropriate. Here you have a chairman and CEO who’s horribly conflicted leading a process.

And so we’ve said, look, we tried initially to do kind of a shareholder referendum. The company fought that and it would cause delay. And shareholders said, look, just go to this special meeting. We’ve launched a special meeting process. We’re in the process of collecting the shares we need to call the meeting. The company could tomorrow hold a meeting of its shareholders to ask them what they think.

Instead what the company is doing is delaying as long as possible and trying to what they call – what some people call defending the company. And on the conference call they talked about running out and doing an all-cash deal that wouldn’t require shareholder support as a way to defend the company. And I’m frightened of that, as – as should every shareholder.

ERIK SCHATZKER: Bill, if you’re right and Allergan is ignoring its largest shareholders, those others than you, don’t you think we would have heard from some of these people before? These are some of the largest institutional money managers in the world. Capital Group, Blackrock, Vanguard, State Street, State Farm, T. Rowe, even John Paulson. Wouldn’t these people be speaking up?

ACKMAN: They are.

SCHATZKER: No, no, no, but – but in a public way.

ACKMAN: In a public they are, okay? And here’s how they’re speaking up a public way. CapRe sold all of its stock I read this morning in The Wall Street Journal and they sold their stock after meeting with David Pyott. And I believe the reason why they sold their stock is they did not believe the company could justify the value of a Valeant transaction as an independent company and I think David Pyott probably told them that he, as he’s told everyone, he has no interest in doing a deal over his dead body with Valeant. And that was a frightening thing to CapRe.

But the other shareholders you mentioned other than John Paulson don’t go on CNBC and don’t speak up. They are passive, very smart, successful, terrific institutions, but their MO is not to speak up. And so it’s really the – the shareholder activists who are the more vocal shareholders. And John Paulson, one of the largest shareholders of Allergan, has spoken up and has said that he supports the transaction.

RUHLE: Earlier today when Erik and I spoke to Valeant CEO Mike Pearson, we said what would happen if you walked away. He said Bill Ackman would be a very unhappy shareholder. Is that the case?

ACKMAN: Yes.

RUHLE: And what would that —

ACKMAN: Unless – unless – unless Mike Pearson walked away because there was some better transaction for Allergan shareholders. At the end of the day, we want what is the best for Allergan shareholders. We own only Allergan stock. The higher the price, the better. And if there is an alternative party that will offer more value than the strategy value created by this combination, we’ll have to listen to that. And if that’s competitive enough so that the shareholders don’t want Valeant’s bid, then we’ll – then we’ll go in that direction.

SCHATZKER: Or is it possible, Bill, that Mike finds something better to do? To the point that you made earlier, Allergan appears to be dragging this on as long as possible. Now it doesn’t really cost Mike anything to say. It also doesn’t cost him anything to walk away. Valeant’s whole business is built on acquiring companies that have some near-term prospects in cutting the costs in the R&D pipeline. Maybe he’ll find something that appeals to him better and walk away.

ACKMAN: Erik, that’s not accurate characterization of their business. That sounds like a characterization of the business that Allergan gave you. Allergan’s having a tougher time characterizing Valeant as a company that just cuts and cuts and cuts because I woke up this morning and Allergan cutting a third of their R&D workforce, right? Allergan was supposed to be all about –

SCHATZKER: I’m – Bill, you know that

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