Penney allows Ackman to take bigger stake
NEW YORK (Reuters) - J.C. Penney Co Inc (JCP.N) will allow investor William Ackman to raise his stake in the department store operator, easing a restriction put in place last October when it adopted a provision to stop him from taking over.
Under an agreement between the two, Ackman's Pershing Square Capital Management, Penney's largest investor, is now allowed to own up to 26.1 percent of the retailer, according to a regulatory filing on Friday.
In a separate filing, Pershing Square said that it raised its stake to 18.3 percent of J.C. Penney stock.
But the agreement limits his voting power to 15 percent regardless of how many more shares he buys.
Penney's shares rose 2.7 pct to $24.46 in afternoon trading.
Pershing Square disclosed last October that it had taken a stake in Penney at the same time Vornado Realty LP (VNO.N) took a 9.9 percent holding, saying Penney was "underperforming" its rivals.
Later that month, Penney adopted a "poison pill" provision that would go into effect if any shareholder bought 10 percent or more of the stock, or if a shareholder with an already higher stake such as Pershing bought more shares.
Ackman and Penney later struck a more cooperative tone, and Ackman in February landed a seat on Penney's board. Ackman was also central in helping recruit Apple Inc's (AAPL.O) top retail executive Ron Johnson as Penney's next chief executive, beginning in November.
Under the new agreement, Ackman's firm could not transfer shares to another party if the transfer brought that party's stake in Penney above 10 percent.
Penney last week forecast more sales gains in the current quarter but gave a profit forecast that fell short of Wall Street expectations because of price cutting that may hurt margins.
(Reporting by Phil Wahba. Editing by Robert MacMillan and Gerald E. McCormick)
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