Update: JC Penney's New Poison Pill
By: J.C. Penney has put in a poison pill that prevents any other shareholder from exceeding a 10 percent stake in the company.
This follows Pershing Square Capital Management's recent assault on J.C. Penney . The hedge fund is headed by noted activist investor Bill Ackman.
Pershing Square's move involved 39 million shares of Penney through purchases of common stock (the firm bought $130 million worth earlier this month) and through long-dated call options—enough for a 16.5 percent position in the retailer.
In addition, Vornado Realty Trust recently disclosed its own 9.9 percent stake J.C. Penney—making for a combined 26 percent stake in the retailer.
Vornado is no stranger to retail. It is a part owner of Toys "R" Us and had previously owned shares of Sears. But it’s presence in such situations usually points to value in the underlying real estate and a frequently-stated goal in such situations of somehow splitting off the target company’s real estate from its retail operations.
Ackman’s track record in retail investing has not been a resounding success. His largest single investment was in Target through a special purpose vehicle which, though it has rebounded sharply, is far from his best investment.
And while J.C. Penney's stock remains strong, it remains unclear what the plan for the retailer will be going forward. But, this is certainty shaping up to be a big fight and perhaps bankers are starting to get active on a strategy to potentially battle Ackman and Vornado.
Stay tuned...
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