UPDATE 1-Ackman to sell his fund's 39.1 mln shares in J.C.Penney
(Adds details on decision to sell, stock price)
Aug 26 (Reuters) - Hedge fund manager William Ackman, the single biggest shareholder in J.C. Penney Co Inc, is selling his entire stake in the ailing retailer, according to a regulatory filing on Monday.
Ackman's $11 billion Pershing Square Capital Management is offering its roughly 39.1 million shares for sale and is using Citigroup as the bookrunner for the deal, the company and the hedge fund said in separate announcements.
News that Ackman, who stepped off the board two weeks ago and ironed out a deal to walk away from his ownership stake , is selling his 18 percent stake pushed Penney's shares down 2.6 percent to $13.00 in after-hours trading.
The department store chain, which is struggling to reverse a massive sales slide, has seen its shares fall about 32 percent so far this year.
Last week, Ackman acknowledged that retail investing has not been his strong suit but did not tell investors what he planned to do with the stock. Ackman acknowledged that the investment in J.C. Penney ranks as one of his fund's "failures."
He had hammered out a deal, however, which allowed him to make up to four requests to the company to register the sale of his restricted common stock.
Restricted shares are issued to certain company executives and shareholders to prevent premature selling that might adversely affect the company.
Such stock cannot be sold without registration with the U.S. Securities and Exchange Commission or through some other exemption.
Ackman was restricted from selling stock immediately after his resignation from the board as he was privy to confidential information about the company as a director.
The 47-year-old billionaire is leaving three years after he built his position and as his campaign to overhaul the retailer is in tatters after former CEO Ron Johnson, the man he wooed to join J.C. Penney from Apple Inc, was forced out in April.
Johnson's plan to upgrade merchandise, streamline pricing strategies and attract new customers with made-over stores was a failure, analysts said.
Ackman's fund has lost hundreds of millions of dollars on the investment and the billionaire is making such a swift and complete exit because of a disagreement with the Penney board over strategy, a person familiar with his thinking said.
Pershing Square began buying J.C. Penney stock on Aug. 27, 2010, for $20 a share and finished buying on Oct. 6, 2010, when the share price was at $28.92.
Other hedge fund managers including George Soros and Richard Perry, however, are seeing value in the company, according to recent regulatory filings.
(Reporting by Svea Herbst-Bayliss in Boston; editing by Gary Hill and Matthew Lewis)