J.C. Penney Co. Inc.’s board adopted a shareholder rights plan for a term of one year.
The plan, known as a poison pill, is an antitakeover mechanism to discourage new investors from gaining control of the company.
The plan was not adopted in response to any effort from an investor to acquire control of Penney’s, the company said.
By putting the plan into place, the board is taking a proactive stance as a preemptive measure to make it more difficult for someone to come in and try to take control of the retailer. That’s achieved by diluting the stake of the would-be acquirer, who can’t take part in the plan, and by raising the price of the stock. The plan will continue in effect until Aug. 20, 2014, unless the rights are redeemed or exchanged for shares of common stock by the company on an earlier date.
Under the terms of the plan, shareholders receive a dividend of one right for each share of the company’s common stock held by stockholders of record as of the close of business on Sept. 3. These rights are not initially exercisable, but can become so under the plan if a person or group becomes an “acquiring person” who obtains beneficial ownership of 10 percent or more of the firm’s common stock. Excluded from the definition of “acquiring person” are Pershing Square Capital Management and Vornado Realty Trust, each of which are existing shareholders.
Once a person or group becomes an “acquiring person,” the holder of each right, other than the “acquiring person,” will be entitled to buy, for an exercise price of $55 per right, additional shares of stock that have a market value of $110, or twice the exercise price.
Citi broadlines analyst Deborah Weinswig said that the plan “should service to limit potential distractions for management as they work on turning around the business. We were somewhat surprised that the plan was put in place and that the ownership threshold was relatively low, just 10 percent.”
This isn’t the first time Penney’s has adopted a poison pill.
In October 2010, the retailer’s board adopted a similar plan to make it prohibitively expensive for anyone, particularly William Ackman of Pershing Square Capital Management, to take control of the retailer without consent of the board. At the time Ackman had a 16.5 percent stake of the retailer. He subsequently upped that stake to 17.7 percent and joined the Penney’s board. Earlier this month, Ackman resigned his board seat after a bitter battle aimed at getting rid of Penney’s chairman Thomas Engibous and chief executive officer Myron “Mike” Ullman 3rd.
The poison pill keeps control of the company at the hands of the board by forcing the acquirer — who either then hits the 10 percent threshold or who already has hit the threshold and wants to acquire more — to deal directly with the company. That is what happened in the case of Ackman, in which his firm, Pershing, entered into a shareholder agreement with Penney’s when it added to its stake to raise its holding to 17.7 percent.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty