JC Penney has reportedly announced that it has adopted a shareholder rights plans, also know as a “poison pill,” in an attempt to fend off billionaire activist investor William Ackman, who has recently set his sights on the retailer.
Under the new plan, JC Penney shareholders will get a warrant for a preferred share that would carry the same value and voting power of a common share, which would in effect force Ackman, who already owns a large stake in JCP, to acquire more shares. The rights plans won't prevent a takeover, but they will dilute Ackman's current assets. Pershing Square Capital Management LP, which Ackman represents, is the retailer's biggest investor, owning 16.5% stake.
