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Bill Ackman Says Was Approached By PE Firm To LBO J.C. Penney Two Years Ago

Tyler Durden's picture




 

An interesting tidbit from Pershing Square's just released quarterly letter discussing JCPenney:

When we first announced our stake in JCP, the stock price increased to the low $30s per share. Shortly after announcing our stake, we were approached by one of the most well-respected private equity funds in the world who expressed an interest in acquiring the company at a substantial premium. While we welcomed this fund as an owner of the stock, we had no interest in selling the company for a quick premium because we believe in the long-term value creation opportunity.

Now before anyone rushes out and buys the company on takeover interest, it is worth noting that Ackman first got into JCP back in  Q3 of 2010.

Below is the history of Pershing Square's holdings in JCP:

Quite a bit has changed since Q3 2010. More importantly, if a PE firm liked it at $30 (and assuming the traditional 25% LBO premium, that means more likely $40) it likely would have liked it much lower, where it is now. And yet... Nothing so far.

Incidentally, a potential LBO bid has long been an upside catalyst in the name (think RSH). If anything, this likely means one less suitor out there, or at least the access to debt financing component of an LBO is far harder now than back in 2010, especially when it comes to retail companies.

Full Ackman letter.

 

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Tue, 06/12/2012 - 16:24 | 2519391 jcia
jcia's picture

PUMP AND DUMP

Tue, 06/12/2012 - 16:30 | 2519412 notbot
notbot's picture

Are you going to link to the letter?

Tue, 06/12/2012 - 16:36 | 2519439 SilverTree
SilverTree's picture

POOP AND SCOOP

Tue, 06/12/2012 - 22:33 | 2520234 The Monkey
The Monkey's picture

So Bill is pumping a retailer in 2012, as recession is just getting started, as he laments getting out when the getting was good...

And all of this is being communicated via ZeroHedge? I could throw up right about now.

Tue, 06/12/2012 - 17:47 | 2519682 FlyoverCountryS...
FlyoverCountrySchmuck's picture

Seriously, if anyone is looking to buy this company, with a 20+% drop in sales due to it's "new" gay focus, and a National Boycott, by all means, PLEASE WASTE YOUR MONEY.

You can buy the same cheap, chinese-made crap at Walmart, with a different label, for half the price.

Tue, 06/12/2012 - 17:58 | 2519709 NotApplicable
NotApplicable's picture

And they're hetero friendly.

I keed!

Tue, 06/12/2012 - 19:00 | 2519865 greyghost
greyghost's picture

flyovercountrys....so right you are. knew this was going to happen in jan. with jcp commercial with the screaming women. hell i had to tell my girls that the commercial was for j.c.pennys. they couldn't stay long enough to see who's commercial it was. just to damn insulting. so i e-mail jcp and get back the canned response. so i e-mail them again and this time i get a different web site embedded in their e-mail. what the hell i go to the website and it is jcp shareholder/corporate meeting launching the gay/lesbian ad campaign. so they show a commercail that will air and than introduce the ceo. well, all i can say that was the coldest reception i ever saw. half the people in the room had their arms crossed, 1/4 sat on their hands and the last 1/4 gave a golf clap! nothing like insulting 98% of your customer base all the while you make your social statement. this is a clear cut case of those at the top taking down a corp. for their personal agenda. the asses running jcp could care less about the worker bees......the ceo and others have multi million dollar pay packages. and people want to know why i don't claim to be of the baby boomers generation...i just tell people i am an alien.  here to confirm there is no intelligent life on this planet.

Tue, 06/12/2012 - 20:06 | 2519996 SilverIsKing
SilverIsKing's picture

Ackerman is surely using any pump to unload this abomination. If the stock pops tomorrow, it will provide a good opportunity to short.

Tue, 06/12/2012 - 20:34 | 2520038 francis_sawyer
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 "There's a sale at Penny's"!

~ Jonny - AIRPLANE

http://www.youtube.com/watch?v=uJSgZYUnQn0&feature=related

Tue, 06/12/2012 - 16:25 | 2519397 ACP
ACP's picture

So that makes them as strategically adept as US homeowners who bought at the peak.

No one seems to want a house, now that they are 60% off (at least the people who can gets loans).

Tue, 06/12/2012 - 17:29 | 2519622 CrazyCooter
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I had this conversation at lunch today. My boss married, filed divorce, then filed bankruptcy. She had multiple properties with her ex, including a property in Anchorage. Now, this is several years back, BofA still hasn't forclosed the property. She says she keeps getting letters trying to hook her back in (e.g. buy the house back, you owe us X, etc). The place has been vacant for years. Apparently the bank hired a company to do basic maintenance and upkeep.

There is no way in hell I would touch housing right now. While many have seen the coverage on shadow inventory, this is just an anecdote. Oh, and the kicker; she has friends in similar situations (i.e. living and not paying a mortgage payment - for years).

I will consider it ... after this market crashes and burns, otherwise I watch from afar and horde stuff.

Regards,

Cooter

Tue, 06/12/2012 - 16:27 | 2519398 mayhem_korner
mayhem_korner's picture

 

 

Great post.  I'd plum forgot that there is a private sector still out there.

Tue, 06/12/2012 - 16:28 | 2519406 mayhem_korner
mayhem_korner's picture

While we welcomed this fund as an owner of the stock, we had no interest in selling the company for a quick premium because we believe in the long-term value creation opportunity.

 

They must be getting advice from Robofader...

Tue, 06/12/2012 - 18:07 | 2519727 NotApplicable
NotApplicable's picture

I was thinking more of Buffet and his "old-man-isms," given we're talking about a dinosaur.

 

 

Tue, 06/12/2012 - 16:30 | 2519413 Greater Fool
Greater Fool's picture

Now there's leadership: Trumpet a horrible mistake as evidence of your fortitude and optimism.

war is peace

ignorance is strength

freedom is slavery

...and a recent addition:

debt is wealth

Tue, 06/12/2012 - 16:38 | 2519452 scatterbrains
scatterbrains's picture

debt is wealth if you bought all your eagles with a credit card.

Tue, 06/12/2012 - 16:32 | 2519422 Shizzmoney
Shizzmoney's picture

According to my sources, JCPenney is going to go bankrupt by Q2 2013.

Tue, 06/12/2012 - 16:34 | 2519429 mayhem_korner
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It's like FaceBook in reverse...

Tue, 06/12/2012 - 16:37 | 2519445 SilverTree
SilverTree's picture

Koobecaf?

Tue, 06/12/2012 - 16:54 | 2519514 ghengis86
ghengis86's picture

KoobFace was the name of a particularly nasty virus that was going around on FB a while back.

Tue, 06/12/2012 - 16:35 | 2519433 SemperFord
SemperFord's picture

JCPenney has been slowly laying off eployees for a year now in Los Angeles. Had a major layoff over a month ago in Culver City, CA (not sure about anywhere else) sales are way down and a chick who works there says sometimes(during regular hours) you can only see employees in the store.

Management from the corporate offices have been scrambling to pick up sales and they don't stock nor do huge sales anymore...Ta Ta JCPenney

Tue, 06/12/2012 - 16:38 | 2519451 SilverTree
SilverTree's picture

I went to a J.C. Penney once.

Tue, 06/12/2012 - 18:02 | 2519714 exi1ed0ne
exi1ed0ne's picture

I use to buy all my dress shirts and slacks from JCP. Even bought a few suits when they had a sale because I'm no 6 figure salaryman. Then a few years ago the quality turned to absolute shit. Cuffs on the shirts would get threadbare and worn after about 6 months of light wear, buttons falling off and breaking, and overall quality went south in a big way.

Of course even the uppity men's stores are starting to go the same route. I'd rather pay for good quality shirts that get more comfortable with time then one's you have to bin every 6 months. I'm just crazy like that.

Tue, 06/12/2012 - 18:11 | 2519735 NotApplicable
NotApplicable's picture

I find all the nice shirts I need for $3 a pop at the Starvation Army store near the rich folks' neighborhood.

Tue, 06/12/2012 - 19:02 | 2519871 mkhs
mkhs's picture

Three dollars? I've been paying five.

Tue, 06/12/2012 - 18:21 | 2519773 Lester
Lester's picture

Clothes?  Much likely to find Better Quality at Thrift & Resale shops.  Just watch for wear on the cuffs and collars  and lots of laundry marks.  For $5 for good quality Enro or Brooks-Brothers shirt it's hard to go wrong.  Ties?  $2/ea.  Find a suit that fits and have it altered.

The hometown upscale dept stores were once staffed by professionals who knew their business.  Not any more.  Suits wear thin at the knees and elbows.  Anything you can find from the now long defunct upscale places will be better than you can buy now at any price.  Buying new is just throwing money away....

Tue, 06/12/2012 - 17:49 | 2519688 FlyoverCountryS...
FlyoverCountrySchmuck's picture

I KNOW!

Maybe they could pander more to the 2% of the population that's queer, instead of the 95% that IS NOT GLBT!!

Would that be a good marketing strategy?

Tue, 06/12/2012 - 16:35 | 2519436 turtle777
turtle777's picture

JCP and Sears will merge. Boom. Loser + Loser = instant winner.

Tue, 06/12/2012 - 16:47 | 2519489 Whatta
Whatta's picture

..and then merge with Best Buy and Barnes and Noble to become the largest go-nowhere dinosaur in the iAge.

Tue, 06/12/2012 - 16:40 | 2519462 slaughterer
slaughterer's picture

I really do not understand Akman's obession with JCP.  I made good money tailgating his General Growth Properties call. But JCP I would not touch at all.  Not ... at ... all.  

Tue, 06/12/2012 - 16:47 | 2519483 CommunityStandard
CommunityStandard's picture

I read the full Ackman letter.  The new JCP strategy set to start in August is interesting and, if people had jobs and money to spend, I'd think it was promising.  Rather than compete with very low Walmart or internet retailer prices, they are aiming to go mid-range with proprietary products.  Sorry JCP, but a couple making $55,000 combined with kids and an underwater mortgage are not going to pay extra just because your crap is a little bit nicer.

Tue, 06/12/2012 - 18:15 | 2519743 NotApplicable
NotApplicable's picture

Those people are no longer considered mid-range. The new mid-range will be the ones who are trying to pretend they're still top-shelf.

Given the current numbers of stupid, rich people today, there should be no shortage of the wannabes clinging to the dream.

That said, whether JCP can attract their money is a different story altogether.

Tue, 06/12/2012 - 18:45 | 2519824 CommunityStandard
CommunityStandard's picture

Yes, though I suspect the new mid-range will still cling to high-end purchasing only.  Hell, even poor people buy high-end for a few certain (dumb) things and then cheap for everything else.  Nobody is buying mid-range.

Tue, 06/12/2012 - 16:46 | 2519487 BlueStreet
BlueStreet's picture

Hey Bill, you might want to take a walk down the street and ask 10 people under the age of 75 what they think of J.C. Penny and then rethink your long-term value creation premise.  

Tue, 06/12/2012 - 20:58 | 2520077 azzhatter
azzhatter's picture

Ackman must be taking advice from his mother on JCP. This pig is a loser

Tue, 06/12/2012 - 16:50 | 2519496 FurZo
FurZo's picture

The world of market guru's also chastised Ackmins short on MBIA. After he intially shorted MBIA, the spreads on his CDS tightened, he lost lots of money, then even more gurus jumped on the band wagon...and then Ackmin began minting money with his long CDS positions as the rest of the market realized his contrarian view was spot on. Lesson: Do not judge a trade until the trader gets out. Just because timing may have been off, doesn't mean that the trade is a dud.

And I love how some guy just posted that he follow Bill on some calls but acts as if he is somehow superior to bill because he knows when Bill is right or wrong.

Tue, 06/12/2012 - 17:30 | 2519621 slaughterer
slaughterer's picture

Bill is wrong on JCP.  I am superior to Ackman.   Love, slaughterer.  

Tue, 06/12/2012 - 19:07 | 2519881 mkhs
mkhs's picture

Was he in Borders?

Tue, 06/12/2012 - 16:52 | 2519503 QQQBall
QQQBall's picture

JCP - used to get all my skool clothes there; havent been there in at least a decade... what for?

Tue, 06/12/2012 - 17:40 | 2519657 BlueStreet
BlueStreet's picture

only a decade?

Tue, 06/12/2012 - 16:56 | 2519504 Shizzmoney
Shizzmoney's picture

I had to set up 30 new items for JCP for my company.  Took me 3 days.

3 months later, they cancelled the order.

Fuck them.

The funny part?  The baby boomers at my job, who see JCP as a staple of American Business, can't fathom the thought of it going donkdown.  Like it almost should never happen.

There is this thing called Risk of Ruin.  It doesn't discriminate, Baby Boomers who run our corporations...and our country...into the ground. 

Tue, 06/12/2012 - 17:32 | 2519631 surf0766
surf0766's picture

$uck the baby  boomer.

Tue, 06/12/2012 - 17:07 | 2519549 Seasmoke
Seasmoke's picture

i often go to JCP, as its the quickest entrance into the mall......plenty of parking and no customers to get in ur way !

Tue, 06/12/2012 - 17:37 | 2519648 CrazyCooter
CrazyCooter's picture

LMAO!

You forgot to mention you were there to mall walk in the free air conditioning ... because there isn't anyone in your way, there is security on site, and the water at the fountains is free.

Regards,

Cooter

Tue, 06/12/2012 - 20:16 | 2520012 SilverIsKing
SilverIsKing's picture

JCP in Manhattan serves as a great cut through when getting off the M train on your way to Penn Station.

Tue, 06/12/2012 - 17:09 | 2519559 Ben Bunger
Ben Bunger's picture

Has He heard of Amazon ?

 

 

Tue, 06/12/2012 - 17:13 | 2519570 oddjob
oddjob's picture

Ackman's main talent is that his dad was rich.

Tue, 06/12/2012 - 20:59 | 2520079 azzhatter
azzhatter's picture

My feeling exactly, but there seems to be a lot of manlove for him on ZH. Personally I think he's a smug little prick

Tue, 06/12/2012 - 17:31 | 2519626 surf0766
surf0766's picture

I think the store sucks.

Tue, 06/12/2012 - 18:14 | 2519742 BlueStreet
BlueStreet's picture

NM

 

 

Tue, 06/12/2012 - 19:47 | 2519964 Extremist Tan
Extremist Tan's picture

Eerily similar to Eddie Lampert's obsession with Sears and K-Mart.  Their obsession with fading-to-black mid-range retailers shows their blindspot for flyover country.  If they had asked their more downmarket classmates at Harvard and Yale, they would have learned that JCP, Sears, and K Mart all lost whatever coolness they may have had by the 1970s.  At that point, Lampert and Ackman, bless their hearts, were learning French, getting their first suits at J. Press/Brooks Brothers, and skiing in Stowe.

Tue, 06/12/2012 - 20:55 | 2520075 Common_Cents22
Common_Cents22's picture

hey just look at kentucky fried chicken,    just change the name to JCP, or better yet, JC Billion or JC Trillion to keep up w/ the times.

THAT's how you go upscale!

Tue, 06/12/2012 - 23:56 | 2520389 GoNavy
GoNavy's picture

Odd that this comes out after the WSJ piece that pummeled the idiot management for trying to slather their Coastie (East or West) elitist sensibilities on the more humble and grounded folks in places like Oklahoma City and Davenport, Iowa.

Surprise surprise surprise: with gays making up on four percent of the population (and most of them in New York and San Francisco), most Americans  (and virtually all J.C. Penney's shoppers) could give a rats ass about advancing the Gay social agenda.

Let the Penneys people be: fire the morons that are running the joint, bring some good solid managers up from the ranks, give the employees some equity, and watch the SOB take off.

Oh, wait....that wont' work.  Ellen Degenerate might say she's offended.

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