(Reuters) – J.C. Penney Co Inc said activist investor Bill Ackman, who has been pressuring the struggling department store operator to oust its chairman and chief executive, has resigned from the board.
The company’s shares, which have lost a third of their value this year, rose as much as 4 percent in premarket trading.
Ackman, whose Pershing Square Capital Management owns about 18 percent of J.C. Penney, has been embroiled in a public battle with the retailer after he aired his concerns about the course of the company and the performance of its top management.
Ackman has demanded the ouster of Chairman Thomas Engibous and the replacement of interim Chief Executive Myron Ullman.
“At this time, I believe that the addition of two new directors and my stepping down from the board is the most constructive way forward for J.C. Penney and all other parties involved,” Ackman said in a statement released by the company on Tuesday.
J.C Penney said retail industry veteran Ronald Tysoe would join its board and that it would appoint another director soon.
Tysoe spent 16 years as vice chairman of Federated Department Stores Inc, now Macy’s Inc, and currently on several other boards.
The Wall Street Journal reported earlier that as part of the negotiations over board composition, Ackman’s effort to immediately remove Ullman would be put on hold. (link.reuters.com/bez32v)
The public battle between Penney and Ackman escalated late last week with the hedge fund manager demanding the ouster of Engibous as well as Ullman. Ackman had demanded that Ullman be replaced within the next 30 to 45 days.
Ackman’s resignation may be a victory in short term for Ullman and the board but will give Pershing Square more latitude to begin selling its big stake in the company.
It also remains to be seen what other large investors do if Ullman remains at helm for an extended time.
So far, the other large investors have held off on making changes to their holdings.
Soros Fund Management LLC, backed by billionaire financier George Soros, is holding on to its 7.9 percent stake in Penney, a source familiar with the matter said on Monday.
Another large Penney investor, Glenview Capital Management, also appears to be sitting tight on its “passive” 4 percent stake in the retailer.
A person familiar with the hedge fund led by Larry Robbins said the firm had not taken any sides in the public dispute between Ackman and Penney’s board.
Penney shares were up 2 percent at $13.49 in premarket trading.