The report published by Reuters hinted that J. C. Penney Company Inc. (JCP) recently relaxed its earlier-announced provision on limiting the stakeholders’ interest in the company. Going with the development, J. C. Penney will now allow one of its largest shareholders Vornado to increase its stake to15.4%.
However, the company through an accord restricted the voting power of Vornado to 9.9%, which is also reliant on Vornado holding no less than 5.9% of the company’s shares.
A month earlier, the company adopted a similar stance and allowed William Ackman's Pershing Square Capital Management to increase its stake to 26.1% from 16.5%. However, the company lowered the voting rights of Pershing Square.
Last year, J. C. Penney implemented its Stockholder Rights Plan, often referred to as “Poison Pill”, to fend off an aggressive takeover proffer for the company, or gaining a controlling interest in the company by any person or group of persons to the detriment of the company or its shareholders.
The move followed the disclosures of Vornado and Pershing Square Capital Management, having taken 9.9% and 16.5% stakes, respectively, in the company.
It is to be noted that William Ackman, founder and CEO of Pershing Square Capital Management and Steven Roth, chairman of the board of Vornado Realty Trust, were included in the company’s board earlier this year.
J. C. Penney, which competes with Macy’s Inc. (M) and Kohl’s Corporation (KSS), currently operates more than 1,100 department stores in the United States and Puerto Rico.
We reiterate our long term ‘Neutral’ recommendation on the stock.
Currently, J. C. Penney holds a Zacks #4 Rank, which implies a short-term ‘Sell’ rating (for the next 1–3 months).
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