J.C. Penney Company, Inc. (NYSE:JCP) is instituting a new plan to block takeover bids for the next year. The plan, which was revealed in a statement released earlier today, will trigger if a single shareholder, or group of shareholders, owns more than 10 percent of the company. According to the company, the plan will not be triggered by the stake of current shareholder Bill Ackman.
The struggling retailer has been the target of many large investments from big players. Today’s shareholder rights plan is not, according to Bloomberg, in response to any specific effort to take over the company. With a slumping share price and big hopes for recovery, J.C. Penney Company, Inc. (NYSE:JCP) could be a ripe target for takeover, however.
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J.C. Penney hedge fund interest
J.C. Penney Company, Inc. (NYSE:JCP) stock is owned by many of the big investors on Wall Street. Ackman holds close to 18% of the company, George Soros holds around 9%, State Street has just over 8%, and Richard C. Perry’s Perry Corp holds more than 7% of the company. Hedge funds are looking at J.C. Penney Company, Inc. (NYSE:JCP) for a big recovery, and one or more may decide it’s in their interest to own the whole thing.
Kyle Bass is the most recent big hedge fund investor linked to the retailer, though his bet was on the company’s debt. The hedge funds and other big investors doing business at J.C. Penney will be in for a serious battle if they want to launch a takeover bid. That campaign has led to several problems between Ackman and the board at J.C. Penney. Last week, Ackman resigned from that board.
J.C. Penney Company, Inc. (NYSE:JCP) is not looking to sell itself, it’s looking to transform itself. By instituting this shareholder rights rule, J.C. Penney is hoping to relieve some of the pressure coming from investors. Bill Ackman & co. may have other ideas.
Ackman is safe
According to the statement, shareholders who currently have big stakes in J.C. Penney Company, Inc. (NYSE:JCP) will not be affected by the shareholder rights plan because they already have deals with the company regarding their holdings. That means the company’s biggest investor, Bill Ackman, is safe.
Bill Ackman’s Perhing Square Management and Vornado Realty Trust, which together hold around 24% of J.C. Penney Company, Inc. (NYSE:JCP) outstanding shares, have agreements regarding their holdings. Those agreements stem from the long running activist campaign Ackman has been involved in at the company with support from Vornado.