The battle between hedge fund billionaire Bill Ackman and his latest activist target is heating up.
The pointed comments were just the latest entry in the ongoing saga between Ackman and the New Jersey-based company, which had been grappling for weeks over the activist investor’s quest for board seats. ADP rejected his nominees on Monday.
Ackman had been seeking three spots on ADP’s board as part of a “transformation plan” that he thinks could double the company’s stock price, according to comments made on a recent conference call.
Prior to ADP’s decision, it was Ackman’s hope to sidestep a proxy battle he’d been keen to avoid. He’d previously expressed concern over how a formal submission of board candidates would be interpreted by the media and investment community. Ackman was worried that such an ordeal would give the impression that ADP and his firm Pershing Square Capital Management was “at war,” and asked for an extension, according to the filing.
ADP’s comments were backed up by an August 14 filing from Pershing Square, which cited an email from Ackman in which he said the request for an extension stemmed from his desire to “avoid taking the adversarial step of launching a proxy contest.”
The continued war of words comes two weeks after ADP CEO Carlos Rodriguez said in a CNBC interview that Ackman’s request for an extension reminded him of a “spoiled brat” asking a teacher for an extension on homework.
It’s been a rough week for Ackman, who’s also feeling the heat around his short position in Herbalife. For one, the company’s stock surge on earnings cost the investor $US115 million, according to data compiled by the financial-analytics provider S3 Partners.
And he could be squeezed out of that short position entirely when Herbalife conducts a so-called modified Dutch auction, through which the company plans to buy back $US600 million in shares at $US60 to $US68 a pop. The auction could present Ackman with massive share recalls, as well as cause his daily financing costs to surge.
If history is any indication, we haven’t heard the last of either of these developing sagas.
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