J.C. Penney Adopts Poison Pill - Update

(RTTNews) - J.C. Penney Co. Inc. (JCP) Thursday adopted a one-year stockholder rights plan, or poison pill, to preempt a coercive takeover and to protect shareholders interest.

Poison pill is a defensive tactic, whereby a company releases more of its shares, making it less attractive for an investor to acquire a controlling stake in it.

J.C. Penney said the poison pill was not adopted in response to any move to acquire control of it, and as part of the plan, declared a dividend of one right for each of its common share held by stockholders of record as on September 3.

The company said the rights will be exercisable only if an investor acquires a beneficial stake of 10 percent or more its common stock. But this will not be applicable to William Ackman's Pershing Square Capital Management L.P. and certain affiliates of Vornado Realty Trust.

Ackman is the largest shareholder of J.C. Penney, with his investment firm Pershing Square owning a stake of about 18 percent. Ackman recently said he may sell his stake in the company, upset by its shoddy performance and its sluggish search for a new chief executive.

Ackman has been critical of current CEO Myron "Mike" Ullman, III, who still has the confidence of the board. Earlier this month, Ackman quit the company's board, which pulled him up for releasing confidential boardroom deliberations.

J.C. Penny, based in Plano, Texas, had reported a quarterly net loss that widened to $586 million from $147 million last year, with sales down 12 percent. Results also reflected one-time charges.

Shares of J. C. Penney are trading at $13.24, down $0.09 or 0.68%, on a volume of 7.2 million shares on the NYSE.