Activist investor William Ackman of Pershing Square Capital Management LP, who prodded Target Corp. to sell half of its credit card receivables, is drawing a bead on the retailer’s real estate.
This story first appeared in the October 29, 2008 issue of WWD. Subscribe Today.
Pershing Square, which owns about 9.5 percent of Target’s common stock, said it will make a public presentation today to “detail a potential transaction” that the hedge fund believes “will build long-term value for Target Corp. and all of its stakeholders.” The meeting “will be of particular interest to investors and analysts focused on retail, real estate, fixed income and credit,” the company said.
The company, which first took a stake in Target in April 2007, lauded the retailer’s “thoughtful and constructive approach with shareholders.”
Shares of Target surged $5.85, or 17.9 percent, to $38.54 on Tuesday during the Wall Street rally.
At the end of its last fiscal year, Target operated 1,591 stores. Of that total, 1,352 were owned, 73 leased and another 166 were owned but on leased land. Its current store count is 1,684. Of its 32 distribution centers, 26 are owned outright.
Supporting earlier speculation that Pershing’s proposals centered on real estate, Target said Tuesday that it has shared “various ideas for an alternative ownership structure related to Target real estate” since May. Although it had yet to reach a conclusion on them, the retailer’s “analysis raises serious concerns on a number of important issues, which we have shared with Pershing Square.”
Gregg Steinhafel, president and chief executive officer of Target, said, “We respect the spirit with which these ideas were presented and will share our perspective with the financial community in the near future. The Target board and senior executive team take their fiduciary responsibilities seriously, and will continue to act in Target’s and our shareholders’ best interests.”