The latest boardroom battle that William Ackman, head of US hedge fund Pershing Square Capital Management, has waged has ended in tears – literally, according to US reports.
Over two months the activist shareholder has been involved in a bitter dispute with the board of US retailer Target – in which he has a 7.8 per cent stake – as he tried to appoint his own directors.
The contest, which cost Target Story text1m (£6.9m), reached its climax a fortnight ago when the retailer got the backing of its shareholders and defeated Ackman, who wiped away a tear at the annual general meeting, according to The New York Times.
It is the latest move by Ackman to exert authority over the boards of the companies the $4.5bn (£2.84bn) hedge fund invests in. Earlier this year the New Yorker parachuted in Ron Marshall to run struggling US bookseller Borders, where he is a leading shareholder.
In 2006, as a minority shareholder in Sears Canada, Ackman blocked a takeover attempt by Sears Holding chairman Edward Lampert.
Ackman has said that while he “thinks highly” of Target management, the board has become “insular and unwilling to consider directors outside of their intimate circle”.
Planet Retail global research director Bryan Roberts said: “Ackman is in it to make money for Pershing Square and any investor in a business should be looking to maximise value for the shareholder. But he’s fairly disruptive and likes throwing his weight around. He likes to get a significant position in a business and then persuade it to do what he wants it to – which is usually to realise its cash value through the disposal of part of the business.”
Ackman was planning to create a real estate investment trust with Target’s land holdings.
Roberts added: “Target is not without its problems, but I’m not sure the impact he would have had would have been positive.”
Ackman was also critical of Target’s sliding performance in the past 12 months, compared with rival Wal-Mart.
MHE Retail chairman Edward Whitefield said: “Ackman’s shaking of the tree is opportunistic. For the last 30 years Target has been a high-growth and well-run business. But with the severe pressure on consumers, shoppers have sacrificed its higher quality for the short term. But Target will regain momentum.”
In May Target’s like-for-like sales fell 6.1 per cent.