With Ackman looming, JCPenney adopts poison pill

Retail Editor 6, October 18, 2010

Plano, Texas - A little more than a week after hedge fund manager William Ackman's Pershing Square Capital Management disclosed it had take a 16.5% share in J.C.Penney Inc., the retail company has adopted a shareholder rights plan.

Penney declared a dividend of one right on each outstanding share of the company's common stock.

"Each right entitles the holder to purchase a fraction of a share of J.C. Penney participating preferred stock having economic and voting terms similar to the company's common stock at an exercise price of $130.00 per right," according to the company.

The rights would become exercisable if any person or group acquires 10% or more of J.C. Penney's common stock or, in the case of any person or group that currently owns 10% or more of the common stock, upon the acquisition of additional shares by such person or group.

Real estate firm Vornado Realty Trust recently disclosed a 9.9% stake in JCP.

The plan will expire Oct. 14, 2011.
Penney said it was advised by Barclays Capital Inc. and Goldman, Sachs & Co. as well as legal advisor Skadden, Arps, Slate, Meagher & Flom.
Ackman, an activist investor, tangled with Target in 2008 and early 2009. Ackman, who nominated himself and several affiliates for the four director positions in 2009, also urged Target to spin off its real estate holdings into a separate company. Ackman's slate was defeated by shareholders. To date, Target retains ownership of its real estate.
Thus far, Ackman has not publicly announced what attracted him to JCP nor what he believes the company ought to be doing. The Target tussle was characterized by competing press releases issues by the hedge fund and the retailer. Ackman also mounted a web broadcast to lay out his case to Target investors.

 

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