Activist investor William Ackman's hedge fund Pershing Square Capital Management L.P. has sold its entire 18 percent stake in retailer J.C. Penney Co. (JCP: Quote) to Citigroup Inc. (C) for $12.60 per share, incurring a significant loss of more than $480 million on the deal.
The stake sale comes after Ackman, the largest shareholder of J.C. Penney, failed in his attempt to install a new chief executive at the beleaguered retailer.
In a filing with the Securities and Exchange Commission, J.C. Penney said that Pershing Square sold 39.08 million of the company's shares to Citigroup for $12.60 per share, which will result in total proceeds of $492.35 million.
Ackman's stake sale in J.C. Penney was somewhat anticipated after he had recently warned of such a move. That prompted J.C. Penney last Thursday to announce a poison pill to preempt a coercive takeover.
Pershing Square had previously said that the underwritten offering of 39.08 million shares of J.C. Penney was priced to the public at $12.90 per share. The sale price was also lower than J.C. Penney's closing stock price of $12.76 on Wednesday.
Pershing Square had bought the shares for around $25 per share, mostly in 2010 and 2011. The hedge fund said on Monday that it is selling its entire 18 percent stake in J.C. Penney and named Citigroup as the underwriter.
Ackman joined J.C. Penney's board in February 2011. Earlier this month, Ackman quit the company's board, which had pulled him up for releasing confidential boardroom deliberations.
Ackman was upset by the retailer's shoddy performance and its sluggish search for a new chief executive. Ackman has been critical of J.C. Penney's CEO Myron Ullman, III, who still has the confidence of the board.
Plano, Texas-based J.C. Penney recently reported a net loss for the second quarter that widened to $586 million from $147 million last year, with sales down 12 percent. Results also reflected one-time charges.
JCP closed Wednesday's trading at $12.76, down $0.41 or 3.11 percent on a volume of 30.90 million shares. In after-hours, the stock further declined $0.01 or 0.08 percent to $12.75.
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by RTT Staff Writer
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