Bill Ackman Resigns From J.C. Penney Board, Company Announces New Directors, Shares Rise (JCP)
The drama at embattled retailer J.C. Penney (NYSE: JCP) came to a swift conclusion Tuesday morning as activist investor Bill Ackman of Pershing Square Capital Management resigned from the company's board.
Ackman owns about 17.7 percent of the shares in J.C. Penney.
In a statement issued by the company, the Board of Directors reiterated its support for CEO Mike Ullman and Chairman Thomas Engibous. Ackman was pushing to replace both men with outsiders.
Ackman said, "During my time on the J. C. Penney Board of Directors, I have always advocated for what I believe to be in the best interests of the Company - its stockholders, employees and others. At this time, I believe that the addition of two new directors and my stepping down from the Board is the most constructive way forward for J. C. Penney and all other parties involved."
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The move raises questions as to Ackman's next step. He could look to sell his stake in the company, valued at about $0.5 billion, or he could look to become a disruptive force to the company in a non-board role.
Yesterday, it was reported that other insiders were rallying against Ackman. Although reports that insider Glenview Asset Management was not taking a side quashed earlier rumors of them siding with the board in this public fight, iconic investor George Soros was reported as siding with the board, a key blow to Ackman's position.
Sosnick Nailed It
Also Monday, Gilford Securities' Bernard Sosnick wrote that Ackman needed to get out of J.C. Penney for both his sake and the company's. Sure enough, he could not have been more timely with the call.
New Board Members
The Board of Directors also announced that Ronald Tysoe, a retail veteran who spent 16 years as Vice Chairman at Federated Stores, the precursor to Macy's (NYSE: M). The Board also is looking to add one new executive.
Engibous said, "The Company is extremely fortunate to have the benefit of Ron Tysoe's judgment and experience at this important time. His deep knowledge of the retail industry and his financial expertise will be invaluable to us as we continue the work underway to return J. C. Penney to profitability and growth. I would like to thank Bill Ackman for his service on the Board over the past two years."
Tysoe said, "J. C. Penney is one of America's great companies, and I am very happy to be joining the Board of Directors. I look forward to working collaboratively with the rest of the Board and management to advance the turnaround currently underway."
Tysoe currently serves on the boards of the Canadian Imperial Bank of Commerce (NYSE: CM), Scripps Networks Interactive (NYSE: SNI), Cintas Corporation (NASDAQ: CTAS), and Taubman Centers (NYSE: TCO). He received his Bachelor of Commerce and Bachelor of Law degrees from the University of British Columbia.
J.C. Penney shares rose in the pre-market by 1.82 percent to $13.41 per share.
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