JCPenney has adopted a plan to prevent future takeover attempts. The retailer reported a sixth straight quarter of losses. The company has put into place a plan they call the “poison pill.” JCPenney admitted that there is no current attempt to take over the company. This poison plan is a ‘shareholder rights plan intended to prevent new investors from gaining control of the company. This ‘poison pill’ is designed to dilute the value of a stock by flooding the market with additional shares, making it expensive for an investor to acquire a controlling stake,” according to the WSJ.
Hedge fund manager William Ackman may exit the struggling JCP, as he seeks to sell his 18% equity stake. The poison pill will affect any investor with more of a 10% stake in the business, according to FindLaw.
The retailer has been struggling after the former CEO Ron Johnson planned to reduce discounts and overhaul JCP’s inventory; in doing so $1 billion in losses were accrued, and a 25% decrease in sales were seen. As a result, former CEP Myron “Mike” Ulman was brought back in to try to save the company and stabilize sales.
JCPenney is a Fortune 500 company that is made up of a chain of American mid-range department stores. The store is currently operating 1,107 stores in the 50 states and Puerto Rico. JCP also leases departments to Sephora, Seattle’s Best Coffee, optical centers, portrait studios, and jewelry repair.