Tuesday, November 25, 2008

Merry Christmas, Target

Bill Ackman of the hedge fund Pershing Square Cap Management, said yesterday that over the next five weeks at least Pershing won't press for talks with giant retailer Target, regarding Ackman's REIT plan.

Ackman had proposed -- and Target management has so far rejected -- a plan in which Target spins off a real estate investment trust consisting of the land underneath its stores, which it will thereafter lease from its spun-off entity.

Target claims that "the potential value created, if any, is highly speculative and insufficient to merit pursuit of a transaction given the costs, strategic and operating risks, and loss of financial flexibility."

Ackman? "We intend to pursue the matter in the new year, after the holiday season.”

My guess is that if holiday shoppers are good to Target's bottom line, the issue will go away for longer than that. This coming month is off course generally the make-or-break time for US based retailers.

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