Penney hires Goldman for fight with Ackman: source

NEW YORK (BestGrowthStock) – J.C. Penney Co Inc (JCP.N: ) has hired investment bank Goldman Sachs Group Inc (GS.N: ) to prepare for a potential fight with activist investor William Ackman, a source familiar with the situation said on Wednesday.

Ackman’s Pershing Square Capital said last week it had taken a 16.5 percent stake in the department store chain. He is building an alliance with Vornado Realty Trust (VNO.N: ), which on Friday disclosed it held 9.9 percent of Penney’s shares.

Ackman, now the retailer’s biggest investor, has already told the Plano, Texas-based company that he plans to look hard at its assets and financial condition.

Penney Chief Executive Myron Ullman is planning to meet with Ackman and Vornado chairman Steven Roth within two weeks, according to Women’s Wear Daily.

Know for his savvy in making real estate bets, Ackman said at a conference on Tuesday that Penney has a “better real estate” portfolio than some competitors like Macy’s Inc. (M.N: ). Penney owns about 416 of the 1,108 department stores it operates and Vornado is a major landlord.

Penney hired Goldman for its experience in fighting against Ackman, said the source familiar with the matter, who declined to be named because he was not authorized to speak with the media.

Goldman worked with Target Corp (TGT.N: ) when it faced pressure from Ackman, who tried to get representatives on the discounters’ board of directors.

Ackman failed to gain the board seats, but during his campaign, Target sold 47 percent of its credit card receivables portfolio for $3.6 billion to improve liquidity. Ackman then pressured Target to spin off its land into a real estate investment trust.

Ackman first started buying Penney shares on August 17 for $20.01. Shares have risen sharply since then.

Penney shares were trading for $33.79 in late afternoon dealings, off 2 cents.

Penney has few takeover defenses, having let its poison pill, or shareholder rights plan, expire in 2009. It also has an annually elected board of directors — rather than a so-called staggered board — meaning the entire board could be wiped out in a year, according to a report by FactSet SharkRepellent.

Penney has a takeover defense profile of 2.5, on a scale of 0-10, with 10 being the most formidable defense structure, according to FactSet. The average defense profile for the S&P 500 companies is 3.05, FactSet said.

Representatives for both Penney and Goldman declined to comment.

(Reporting by Phil Wahba and Jessica Hall; Editing by Derek Caney)

Penney hires Goldman for fight with Ackman: source