Hedge fund tells Ceridian it can top takeover deal
By Svea Herbst-Bayliss
BOSTON (Reuters) - Ceridian Corp.'s CEN.N biggest shareholder, William Ackman, told the board on Thursday that he can come up with a better deal for shareholders than a proposed $5.3 billion takeover bid management hammered out.
The human-resource and payroll company said last month it would welcome shareholders' involvement and is ready to review any proposals that might top a $36 per share takeover offer made by Thomas H. Lee Partners LP and Fidelity National Financial.
Ceridian rose 18 cents to close at $35.22 on the New York Stock Exchange.
Ackman's New York-based hedge fund Pershing Square Capital Management LP, which successfully prodded McDonald's and Wendy's into making changes, vowed to fight the Ceridian plan and hired an investment bank and law firm to help.
Ackman, who owns a 14.9 percent stake, has long said Ceridian's stock is worth far more than $36, but has never given a target price.
When Ackman protested the takeover plan, Ceridian promised to entertain other offers. Now the hedge fund is taking the company at its word. On Thursday, Ackman told the board his alternatives include selling the entire company, selling part of it, or recapitalizing it. "We are confident that with your cooperation each of these approaches is reasonably likely to result in a 'Superior Proposal' within the meaning of your merger agreement," Ackman wrote.
The letter was made public in a regulatory filing.
A senior Pershing Square executive declined to comment further on the matter.
Ackman is in touch with potential buyers, but has not said who they are, the executive said.
Pershing Square's position to fight the deal improved after a shareholder lawsuit was partly settled. Ceridian has now agreed to amend the merger agreement to keep a would-be buyer from walking away if Ackman's proposed slate of directors were elected at this year's annual meeting. It also lowers the threshold for what would be called a "superior proposal" to 40 percent from 66.6 percent.
In his letter Ackman requests that management allow him and his advisors, investment bank Lazard Freres & Co. and law firm Sullivan & Cromwell, to review sensitive financial documents so that would-be bidders can better decide what to do next.
Ackman plans to nominate a slate of seven directors stocked with industry experts to run against Ceridian's board in September.
Separately, Bloomberg reported that Ackman has bought more than 5 percent of discount retailer Target Corp., which helped send the company's share price up by as much 7 percent.
Ackman is a long-term investor who tends to prefer building a few positions slowly and over time. Investors have 10 calendar days to tell regulators if they have built a stake of more than 5 percent.
A Pershing Square spokesman declined to comment on the Target stake.
