Daniel Barry, Bloomberg News
Ackman takes $500 million loss on J.C. Penney as saga ends
- Article by: Matt Townsend
- Bloomberg News
- August 28, 2013 - 1:37 PM
Bill Ackman’s Pershing Square Capital Management sold his J.C. Penney Co. stake for $504 million, about half of what he paid for it, marking an end to more than two years of failed efforts to revamp the retailer.
Citigroup Inc. managed the underwritten offering of the 39.1 million shares of the Plano, Texas-based department-store chain at a price of $12.90 apiece, New York-based Pershing Square said in a statement Tuesday. That’s 3.4 percent less than Monday’s closing price of $13.35.
The stake sale hands Ackman a $500 million loss and ends a saga in which his hand-picked CEO Ron Johnson’s plan to turn the chain’s stores into collections of boutiques alienated customers, leading to the worst annual sales in more than two decades. It also follows Ackman’s agreement earlier this month to quit J.C. Penney’s board after a public clash over its direction and management succession.
“Ackman overplayed his hand with Johnson,” said Paul Swinand, an analyst for Morningstar Inc. in Chicago. The stake sale will be the end of a “debacle” for J.C. Penney and its shareholders, he said.
J.C. Penney declined 1.3 percent to $13.17 at the close in New York. The stock has fallen 33 percent this year, compared with a 14 percent gain for the Standard & Poor’s 500 index.
Jennifer Burner, a spokeswoman for Pershing Square, and Daphne Avila, a spokeswoman for J.C. Penney, declined to comment.
Ackman stepped down from J.C. Penney’s board after sparring with his fellow directors over his push to replace Mike Ullman, who succeeded Johnson in April as interim CEO. He drew the board’s anger by making public a letter he sent to directors saying he had persuaded former J.C. Penney CEO Allen Questrom to agree to return as chairman.
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