FILE – In this Tuesday, April 9, 2013 file photo, customers shop at a J.C. Penney store, in New York. William Ackman has resigned from J.C. Penney Co.’s board as part of a deal to resolve an unusually public battle between the activist investor and the struggling department store operator. J.C. Penney’s rose in premarket trading Tuesday, Aug. 13, 2013. (AP Photo/Mark Lennihan, File)
PLANO, Texas (AP) — The boardroom drama may be over, but J.C. Penney is still grappling with an uncertain future.
William Ackman has resigned from J.C. Penney’s board as part of a deal to resolve an unusually public battle between the activist investor and the struggling department store operator.
Ackman’s departure provides some short-term relief from a distraction for Penney while it tries to fix its ailing business and as the crucial back-to-school selling season heats up.
But investors pushed the company’s stock price lower Tuesday as they worry about Penney’s long-term struggle to turn its business around.
The share decline also reflected worries that Ackman might sell shares. Ackman’s Pershing Square Capital Management is Penney’s biggest stockholder with a 17.7 percent stake. CNBC quoted Ackman as saying he had no immediate plans to sell.
“(Penney) got the thorn out of their inside, but they’re both real losers here,” said Charles Elson, head of the John L. Weinberg Center for Corporate Governance at the University of Delaware. It’s bad news for Penney because if Ackman sells his stock, it will hurt the stock price. If he doesn’t, he will still exert a big influence on the company, albeit from the outside.
As for Ackman, the activist investor no longer has an inside view into the company. And if he sells near current prices, he will lose a lot of Login to read more