Perry Backs Pershing Square On Penney's

Aug 12 2013 | 12:30pm ET

Pershing Square Capital Management's William Ackman has won a much-needed ally in his battle with J.C. Penney Co., as the retailer's board considers taking action against him in the wake of his public call for the ouster of both its chairman and interim CEO.

Hedge fund Perry Capital on Friday announced that it had taken a 7.3% stake in Penney's and pushed the company to overhaul its management. The news comes on the same day that Ackman, who sits on Penney's board and whose hedge fund owns 18% of the company, demanded a fast-track process to replace CEO Myron Ullman and said that he had found a replacement for Chairman Thomas Engibous, former Penney's CEO Allen Questrom.

Perry said in a letter Friday to the Penney's board that he supports Ackman's push for Questrom, and that it should hire Foot Locker CEO Ken Hicks as its next chief.

The rest of the Penney's board is furious at Ackman, who handpicked the company’s last CEO, former Apple Inc. marketing executive Ron Johnson, who proved a failure. Engibous called Ackman's moves "disruptive and counterproductive."

The board is considering taking action against its fellow director, meeting by phone yesterday afternoon. Ackman's actions have made him a "rogue" director, the board believes, but it is unclear they can do anything about it.

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