Here are two pieces with comments about disparate deals one activist mangers weighs in on. Some valuable commentary in the first piece.
1. Ackman Weighs In On Wachovia, Shorting BanOctober 7, 2008
Citigroup and Wells Fargo have declared a ceasefire in their battle to acquire Wachovia Corp., and William Ackman couldn’t be happier.
Ackman, who heads activist hedge fund Pershing Square Capital Management, told a New York conference that Wachovia could be worth more split in twain than sold whole. Ackman—whose firm bought up an 8% stake in Wachovia soon after Citi announced a deal to buy Wachovia’s banking unit—suggested that Wachovia be split into banking and brokerage, asset management and insurance halves, with the former going to Citi and the latter to a partner, possibly Wells Fargo.
Citi struck its $2.16 billion stock deal for Wachovia’s banking deposits on Sept. 29. Four days later, Wells Fargo announced it had agreed to buy all of Wachovia for $15 billion, leading to a series of lawsuits. Citi and Wells Fargo, prodded by the Federal Reserve, agreed to a two-day litigation break yesterday in an effort to reach a deal on Wachovia.
Ackman said that Wachovia “did the right thing and acted appropriately” when it accepted Wells Fargo’s offer.
The Pershing Square chief added that his firm has bought a stake in all-but-nationalized insurer American International Group, betting that the federal government, which now owns 80% of AIG, will opt for leniency in its bailout of the firm.
The activist is less happy about other things, notably the soon-to-expire ban on short-selling financial stocks. Ackman said the temporary restriction “did more to destroy investor confidence than anything.”
“Short sellers have been blamed for bringing down the market, but since the ban, the markets have been falling even further, which means the longs are selling now,” he said.
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No Deal In Sight, Borders Issues Warrants To AckmanOctober 1, 2008
With no buyer in sight, bookseller Borders Group has been forced to give an activist hedge fund an bigger say in its future.
The Ann Arbor, Mich.-based company issued warrants for 5.15 million shares to Pershing Square Capital Management, already its largest shareholder with a nearly 29% stake. As part of a March agreement under while Borders hung out a “for sale” sign, without a deal to sell or restructure by Wednesday, the chain had to issue the $7 warrants, which are valid for six years.
Borders runs more than 1,100 stores, and Ackman has been pushing a possible deal with online bookseller Amazon.com.
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