Will a Target Takeover Happen?

William Ackman, the head of investment group Pershing Square Capital Management, is not backing down from his proposed takeover of Target Corp.

Pershing, which controls 7.8% of the retailer’s stock, is trying to convince shareholders to vote five people on to the company’s board. Target, on the other hand, is trying to get its current board members reelected.

So now Ackman is vying to have his own “town hall” meeting on May 11 to convince investors of his plan. Ackman says he brings to the table expertise in credit cards, food sales and real estate. He has also proposed putting the land Target owns under its stores into a REIT.

Does Target, which has had lagging financial results as of late, need a change from an investor like Ackman, or is it just another chain that’s a victim of the recession.


12 Responses to “Will a Target Takeover Happen?”

  1. 1 Tony April 7, 2009 at 8:30 am

    It is ridiculous to even consider this guy’s proposal. Target is a strong, well managed company whose real estate position is an asset. All Pershing cares about is a short term stock inflation so it can sell and make a bunch of money. They don’t care about the long term condition of Target after they are gone.

    This attitude and approach decimated many hi tech companies and will do the same to Targety is the shareholders let it happen.

  2. 2 Broker April 7, 2009 at 8:51 am

    Pershing bought into Target at the market peak and is desperately trying to find a way to recoup some of their losses to pacify the college endowments and pension funds who are desperately trying to explain to their trustees what a great idea it was to get involved with Pershing and pother hedge funds. Hopefully the other stockholders of Target do not buy into Pershing’s little scheme which would turn Target into a Linens-N-Things.

  3. 3 Phil April 7, 2009 at 9:22 am

    I couldn’t agree more with the above comments. This attitude of short term profiteering is one of the major reasons that Wall Street is now collapsing. It amazes me at the number of retailers that have had their future leveraged for short term gain by private equity and hedge funds.

  4. 4 Clevelander April 7, 2009 at 9:33 am

    This seems a lot like Ackman’s First Union Real Estate Investments debacle. His Gotham Parners bought high, won a proxy battle by claiming to be able to “unlock the value” that management was squandering, had no viable plan for the REIT (which had been chugging along without his help since 1961), essentially liquidated its assets, and put all the employees out of work.

    There is a lot more to the story, of course, but I think you can get the picture. Ackman and his cronies probably still made money on the deal, but a lot of long time shareholders and employees got burned.

  5. 5 kin powell April 7, 2009 at 9:49 am

    Ian, stop shilling for a really bad guy.

  6. 6 Fibrut April 7, 2009 at 10:15 am

    Was Pershing involved in the Mervyn’s situation? Where they took the assets off the company’s balance sheet, charged them rent back on properties they used to own, and removed the company’s ability to financially stand on its own? That is my fear for a great retail company like Target.

    Just say NO!

  7. 7 Darrell April 7, 2009 at 3:01 pm

    Down with the Vultures, private equity needs to cough up the money they’ve swindled off the system for the last twenty five years, turning this great nation into a job slaughtering fest rewarding only the most vile, and corrupted individuals in the circle of elite and their corporate executive henchmen.

  8. 8 John Fox April 8, 2009 at 7:10 am

    The implied cap rate of 5% for the TIP REIT by Pershing does not make sense. The cap rate is much higher which means the valuation for the REIT is lower. They need to redo their math and then continue the discussion, which does have some merit.

  9. 9 Adrian F. Brown April 8, 2009 at 8:02 am

    I have worked with most major retailers in my business. Currently have worked with Target for the past 8 years I strongly agree with all the above statements. Target is one of the best run retailers in the country. This is coming from a retail development perspective. Also the employees I work with love there company and feel very strongly about all the support they get from the Target management team.

  10. 10 Dave April 8, 2009 at 8:16 am

    Mr. Ackman should fix Borders Books, another retailer he owns, before he “fixes” Target, then I will have a lot more respect for his thinking.

  11. 11 gary April 8, 2009 at 9:00 am

    Simply put…sounds like a Mervyns redux…enough said.

  12. 12 Ladislao April 9, 2009 at 9:58 am

    Get used to the term “Ghost Malls”… Heck, it’s already happening. This is just the beginning of things to come. Unfortunately we have become a nation of consumers not contributors (generally speaking). The great thing is, THAT IS GOING TO CHANGE !!! We will have NO CHOICE but become either one of two things – Thieves & Robbers, or Givers. I hope for the latter; not initially, but eventually we will become a world of givers, until we get comfortable, complacent, then greedy (out of our boredom) and restart the same cycle all over again… This is JUST MY OPINION…

    BTW, Hi Ian…

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