Ackman's Pershing Square Capital Sells Entire Stake In J. C. Penney

(RTTNews) - Hedge-fund Pershing Square Capital Management, L.P., raised around $504 million from the sale of its entire 18 percent stake in J.C. Penney Co. (JCP) after its founder William Ackman failed in his attempt to install a new chief executive at the beleaguered retailer.

J.C. Penney shares were losing around 3 percent in the pre-market activity on Tuesday.

In its statement on Tuesday, Pershing Square said its previously announced underwritten offering of 39.08 million shares of J.C. Penney was priced to the public at $12.90 per share. J.C. Penney will not receive any proceeds from the sale of the shares. The offering is expected to close on August 30, subject to certain customary conditions.

Citigroup is acting as sole bookrunning manager and underwriter for the offering.

Pershing Square bought the shares for around $25 per share, mostly in 2010 and 2011. Ackman joined the board in February 2011. Earlier this month, Ackman quit the company's board, which pulled him up for releasing confidential boardroom deliberations.

Ackman, the largest shareholder of J.C. Penney, recently had stated that he may sell his stake in the company, upset by its shoddy performance and its sluggish search for a new chief executive. Ackman has been critical of current CEO Myron Ullman, III, who still has the confidence of the board.

On August 22, J.C. Penney adopted a one-year stockholder rights plan or poison pill, to preempt a coercive takeover and to protect shareholders interest. The company then said the rights will be exercisable only if an investor acquires a beneficial stake of 10 percent or more its common stock. But this will not be applicable to Pershing Square and certain affiliates of Vornado Realty Trust.

J.C. Penny, based in Plano, Texas, had reported a quarterly net loss that widened to $586 million from $147 million last year, with sales down 12 percent. Results also reflected one-time charges.

J.C. Penney shares closed Monday's trading at $13.35, down $0.15 or 1.11 percent. In pre-market activity, shares were losing $0.36 or 2.70 percent and trading $12.99.