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.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)