UPDATE 1-Penney hires Goldman for fight with Ackman-source

* Penney hires Goldman for expertise on Ackman – source

* Penney plans to meet with Ackman, Vornado – WWD

* Penney stock near unchanged
(Changes sourcing; adds background in paragraphs 6-8,10-11)

NEW YORK, Oct 13 (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 Aug. 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)

UPDATE 1-Penney hires Goldman for fight with Ackman-source