Ackman takes 9.6% stake in Target to push for changes
Ackman takes 9.6% stake in Target to push for changes
By Jonathan Birchall in New York
Copyright The Financial Times Limited 2007
Published: July 17 2007 03:00 | Last updated: July 17 2007 03:00
Bill Ackman, the activist investor, has taken a 9.6 per cent share in Target, the US discount retailer, and says he will push for changes at a company whose shares have risen more than 45 per cent in the past 12 months.
Mr Ackman's Pershing Square Capital Investment fund has given no details of objectives, but Wall Street analysts expect him to focus on capital structure rather than the company's much-applauded operating performance.
In a regulatory filing yesterday, Pershing Square said it believed Target's stock "is undervalued and [we] intend to discuss with management ways in which this . . . can be corrected".
The filing also said Target, led by Bob Ulrich, its chief executive, had "the strongest operating management in the retail industry". Mr Ulrich was recently named CEO of the year by Chief Executive magazine.
The retailer serves more prosperous middle-class customers than the bigger Wal-Mart and has set standards for its effective marketing and creation of "cheapchic" private-label brandsby designers includingIsaac Mizrahi and Michael Graves. Target would not comment directly on Pershing Square's stake but said the group welcomed "a dialogue on company strategy and performance with anymember of our investor base and the financial community".
Wall Street analysts expect Mr Ackman's discussions with the retailer to focus on its lucrative credit card portfolio andproperty holdings. Target, which operates 1,500 stores across the US and had sales last year of $57.8bn, owns about 85 per cent of its realestate.
Other top US retailers - including Macy's and Kohl's - have sold their credit card businesses but Target says the business is integralto its effort to buildrelationships with its customers. Unlike other retailers, it issues a network Visa card and a Target store "Red" card through its own banking subsidiaries.
In an unusual development, Pershing Square also said it would donate a third of any after-tax profits resulting from its investment in Target to its charitable foundation, set up last year, which funds inner-city development and human rights work. Mr Ackman has previously staged activist campaigns at McDonald's and Wendy's. Pershing Square's stake in Target is valued at more than $5.6bn.
Target's shares, which rose almost 7 per cent when news of Mr Ackman's interest emerged last week, slipped 1.8 per cent yesterday to $68.89.
By Jonathan Birchall in New York
Copyright The Financial Times Limited 2007
Published: July 17 2007 03:00 | Last updated: July 17 2007 03:00
Bill Ackman, the activist investor, has taken a 9.6 per cent share in Target, the US discount retailer, and says he will push for changes at a company whose shares have risen more than 45 per cent in the past 12 months.
Mr Ackman's Pershing Square Capital Investment fund has given no details of objectives, but Wall Street analysts expect him to focus on capital structure rather than the company's much-applauded operating performance.
In a regulatory filing yesterday, Pershing Square said it believed Target's stock "is undervalued and [we] intend to discuss with management ways in which this . . . can be corrected".
The filing also said Target, led by Bob Ulrich, its chief executive, had "the strongest operating management in the retail industry". Mr Ulrich was recently named CEO of the year by Chief Executive magazine.
The retailer serves more prosperous middle-class customers than the bigger Wal-Mart and has set standards for its effective marketing and creation of "cheapchic" private-label brandsby designers includingIsaac Mizrahi and Michael Graves. Target would not comment directly on Pershing Square's stake but said the group welcomed "a dialogue on company strategy and performance with anymember of our investor base and the financial community".
Wall Street analysts expect Mr Ackman's discussions with the retailer to focus on its lucrative credit card portfolio andproperty holdings. Target, which operates 1,500 stores across the US and had sales last year of $57.8bn, owns about 85 per cent of its realestate.
Other top US retailers - including Macy's and Kohl's - have sold their credit card businesses but Target says the business is integralto its effort to buildrelationships with its customers. Unlike other retailers, it issues a network Visa card and a Target store "Red" card through its own banking subsidiaries.
In an unusual development, Pershing Square also said it would donate a third of any after-tax profits resulting from its investment in Target to its charitable foundation, set up last year, which funds inner-city development and human rights work. Mr Ackman has previously staged activist campaigns at McDonald's and Wendy's. Pershing Square's stake in Target is valued at more than $5.6bn.
Target's shares, which rose almost 7 per cent when news of Mr Ackman's interest emerged last week, slipped 1.8 per cent yesterday to $68.89.
posted by Carlos T Mock at 8:13 AM
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