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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jcia's picture


notbot's picture

Are you going to link to the letter?

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.

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.

NotApplicable's picture

And they're hetero friendly.

I keed!

greyghost's picture 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.

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.

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).

CrazyCooter's picture

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.



mayhem_korner's picture



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

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...

NotApplicable's picture

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



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

scatterbrains's picture

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

Shizzmoney's picture

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

mayhem_korner's picture



It's like FaceBook in reverse...

ghengis86's picture

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

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

SilverTree's picture

I went to a J.C. Penney once.

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.

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.

mkhs's picture

Three dollars? I've been paying five.

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....

FlyoverCountrySchmuck's picture


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?

turtle777's picture

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

Whatta's picture

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

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.  

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.

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.

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.

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.  

azzhatter's picture

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

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.

slaughterer's picture

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

QQQBall's picture

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

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. 

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 !

CrazyCooter's picture


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.



SilverIsKing's picture

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

Ben Bunger's picture

Has He heard of Amazon ?



oddjob's picture

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

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

surf0766's picture

I think the store sucks.