Target Warns Shareholders Against Hedge Fund’s Proposed Board
Thursday, April 9, 2009 : PermalinkNew York (HedgeCo.Net) – Target Corp. asked shareholders yesterday to reject a proposed slate of directors nominated by Pershing Square Capital head William Ackman.
Ackman’s hedge fund, who holds a 7.8 percent stake in the discount retailer, is continuing his proxy fight in an effort to boost stock prices and investor returns.
Ackman has suggested selling the land underneath Target locations, prompting the company to warn shareholders against his “risky agenda.”
“Ownership of the land under our stores and distribution centers allows Target to benefit from the value that we create on those sites, and provides necessary flexibility to make significant improvements to our stores to drive our strategy and protect our brand,” Target said in its regulatory filing yesterday.
Hedge fund Pershing Square IV, which is invested solely in Target, rose almost 50% last month after posting record losses last year. Earlier this year, Ackman told investors they could withdraw as much of their capital as they wanted, after the fund plummeted 90 percent. He threw in $25 million of his own money to help pay clients back.
On Monday, Pershing Square proposed a slate of five candidates to the board, all of whom claim to have the retail experience necessary for the company to succeed. Meanwhile, Target is hoping the shareholders will ignore the hedge fund’s advances and instead elect their proposed slate of four.
Ackman’s candidates for the board include himself, Richard Vague, a former bank executive, former Starbucks CEO Jim Donald, Ronald Gilson, a law professor, and Michael Ashner, CEO of Winthrop Realty Trust.
“We believe Pershing Square’s sizable derivative positions create an incentive to favor risk-taking to affect short-term share price performance, even if it harms Target in the long run,” Target added.
Target shares jumped 5.27 percent today in morning trading to $39.58. Shares are still recovering from their tumble in 2008, when they reached almost $60 in September.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
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Tags: ceo jim, discount retailer, investor returns, michael ashner, necessary flexibility, pershing square, pershing-square-capital, proxy fight, realty trust, record losses, retail experience, share price performance, significant improvements, stock prices, target locations, target-corp, term share, william ackman
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