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Ackman sells 18% stake in J.C. Penney's

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By The Associated Press
Tuesday, Aug. 27, 2013, 12:01 a.m.
 

NEW YORK — J.C. Penney's largest investor and former board member is bailing out.

William Ackman of Pershing Square Capital Management is selling his nearly 18 percent stake, or 39.1 million shares, in the struggling retailer, according to regulatory documents filed late Monday.

The move occurs two weeks after Ackman resigned from J.C. Penney's board in a deal to resolve a public battle between the activist investor and the troubled store operator.

The news sent Penney shares down nearly 3 percent to $13 per share in after-hours trading. Penney's shares have lost nearly 70 percent of their value since early February 2012, when investor enthusiasm over former CEO Ron Johnson's retail strategy pushed the stock to about $43. That includes a 36 percent drop in value so far this year.

Some analysts say they were surprised by Ackman's plan to sell his shares so quickly.

“I didn't expect it to be so fast, but I can understand that he wants to put it behind him,” said New York-based retail consultant Walter Loeb.

Belus Capital Advisors CEO Brian Sozzi agreed: “(Ackman) wants to cut bait and move on to something else.”

Citigroup, the sole underwriter of the shares, will be shopping the stock around to prospective buyers. A price range wasn't revealed in the prospectus.

Ackman's sell-off occurs as the beleaguered chain is trying to recover from a botched transformation plan spearheaded by its former CEO that led to disastrous financial results. The board ousted Johnson in April after only 17 months on the job and rehired Mike Ullman, who had been CEO of the retailer from 2004 to late 2011.

Ackman resigned from the board on Aug. 13, after he went public with statements saying he'd lost confidence in Penney's board and that Chairman Thomas Engibous should be replaced.

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