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Keep your friends close and your enemies closer.
The old adage appeared to be on the mind of JC Penney management yesterday when it announced plans to give two activist investors, including hedge fund honcho Bill Ackman, seats on the company’s board of directors.
The Plano, Texas, retailer — which only a few months ago adopted a poison pill aimed at keeping Ackman at arm’s length — also announced a series of money-saving changes that could impact some 3,900 jobs, including plans to close five poorly performing stores.
The chain, with roughly 1,100 stores, will also wind down its catalog business, including 19 outlet stores that carry catalog merchandise, and give a board seat to Steven Roth, chairman of the board of Vornado Realty Trust, who has been working with Ackman to shake up the retailer.
The conciliatory moves, which come just four months after Ackman and Vornado announced a 26.5 percent stake in Penney, appear to head off a costly proxy contest at the shareholder meeting on Feb. 22.
Ackman is known to take big stakes in companies and then fight for changes that boost the stock price. So within a week of Ackman and Roth disclosing their stake, Penney adopted a poison pill aimed at keeping the duo from amassing additional shares.
Yesterday, investors in the retailer applauded the truce, sending the stock up more than 7 percent, to $32.52.
Following the announcement, the company’s CEO and Ackman sought to downplay speculation that the hedge fund titan and Roth are looking to squeeze more value out of Penney’s shares through financial engineering, such as spinning off the company’s real-estate assets. Whatever Ackman and Roth are planning for Penney, “it’s not financial engineering,” CEO Mike Ullman told The Post.
In an interview with CNBC yesterday, Ackman also downplayed suggestions that he and Roth are eyeing the company’s real estate, saying his current goal is to help Penney’s improve as a retailer.
“This company will succeed or fail on a basis of how it does as a retailer,” he said.