Pershing Square's Ackman To Push For Board Seats At ADP

Aug 4 2017 | 10:57pm ET

Bill Ackman’s Pershing Square Capital Management has taken an 8% stake worth about $4 billion in payroll and benefits giant Automatic Data Processing, and is pushing the company for board seats in what ADP characterized on Friday as a quest for “effective control.”

News that Pershing Square had accumulated a substantial position in ADP first circulated in late July following cryptic referrals to new portfolio positions at the fund that were working out very well. Following his fund’s disastrous $4 billion loss on Canadian pharmaceutical maker Valeant, Ackman – one of Wall Street’s most famous activist managers – is certainly in need of a win. 

Ackman will reportedly seek up to four board seats on ADP’s 10-person board, one of which may be for him, according to media reports. Initial reports that Ackman also wanted to replace ADP CEO Carlos Rodriguez were refuted by Pershing Square, which released a statement saying it would be willing to work with existing ADP management or new management brought in from outside the company.

Ackman reportedly asked ADP to delay its August 10 deadline for board nominations in order to continue discussions with the company, but ADP rebuffed his request, noting that the deadline has been known for nearly a year and that it would not be in the “best interests of ADP or its other shareholders” to allow the extension. 

In a statement Friday, ADP noted that Ackman’s 8% stake is largely in derivatives and that contact with the company was first made on August 1. Ackman has not yet identified who will make up his slate of board nominees, according to a Reuters article citing unidentified people familiar with the situation, but could disclose them in regulatory filings as early as next week. 

ADP added in its statement that since Rodriguez became CEO six years ago, the company’s “total shareholder return of 202% is well in excess of the S&P 500 TSR of 128% …and is many multiples of Pershing's TSR of 29%.”

For its part, Pershing Square said it thinks there is an “enormous opportunity” to boost ADP operating performance through faster growth, reducing operating costs and increasing efficiency. 

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