Pershing Square Could Sell Huge Penney's Stake

Aug 16 2013 | 10:59am ET

Pershing Square Capital Management could quit J.C. Penney Co. after striking a deal with the retailer on its 18% stake.

Penney's has agreed to allow the hedge fund to make up to four requests for the registration of its restricted shares. Such registration is necessary for the sale of such stock.

Pershing Square was restricted from selling shares while founder William Ackman served on the company's board and in the aftermath of his resignation earlier this week, amidst a dispute with his fellow board members. It is unclear that Ackman actually wants to exit the investment—if he did so now, it would be at a loss of more than $300 million. But he now has the option.

Ackman left the Penney's board after infuriating his fellow directors with a public call for the exits of interim CEO Myron Ullman and Chairman Thomas Engibous. Ullman returned to Penney's in April after the company ousted Ackman's hand-picked CEO, former Apple Inc. marketing executive Ron Johnson, who oversaw huge losses at the retailer. Ackman's push for a quick replacement of Ullman came after the board had agreed to a six-month search process.

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