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October 21, 2010 1:31 PM

J.C. Penney Turns to Skadden for Poison Pill Defense

Posted by Brian Baxter

Skadden, Arps, Slate, Meagher & Flom is advising J.C. Penney as it attempts to thwart moves by activist investor William Ackman of hedge fund Pershing Square Capital Management to acquire more stock in the company.

Ackman disclosed in a regulatory filing earlier this month that New York-based Pershing Square had taken a 16.5 percent stake in J.C. Penney. That led the company to adopt a short-term stockholder rights plan on Monday seeking to restrict the amount of shares Ackman can accumulate.

Advising J.C. Penney are Skadden corporate transactions cochair Peter Krupp and M&A partners Charles Mulaney, Jr., Richard Grossman, and L. Byron Vance III. The firm has close ties to the Plano, Tx.-based retailer.

J.C. Penney's general counsel is Janet Dhillon, who previously spent 13 years at Skadden before taking the top in-house legal position at U.S. Airways in 2004. Dhillon left the airline for J.C. Penney in January 2009.

Ackman and Pershing Square have turned to Kirkland & Ellis corporate partner Stephen Fraidin, who was named an Am Law Daily Dealmaker of the Week last year for his work helping NRE Energy stave off an unsolicited takeover bid by Exelon, the country's largest electric utility.

Pershing Square previously turned to Fraidin for its ultimately unsuccessful--and highly emotional--effort to appoint five candidates to the board of Target, the nation's second-largest discount chain behind Wal-Mart. (Pershing Square's chief legal officer is Roy Katzovicz.)

An ally of Ackman and Pershing Square--Steven Roth's Vornado Realty Trust--also disclosed in a regulatory filing last week that it now owns 9.9 percent of J.C. Penney's outstanding common shares. Cleary Gottlieb Steen & Hamilton M&A partners Daniel Sternberg and Neil Whoriskey are advising Vorando.

In addition to J.C. Penney, Ackman is homing in on another target, according to the New York Post. Pershing Square also disclosed last week that it had taken an 11 percent stake in Fortune Brands, the Deerfield, Ill.-based holding company for products like Titleist, Master Lock, and Jim Beam.

Jones Day M&A chair Robert Profusek and M&A partner Peter Izanec are advising Pershing Square in that endeavor, according to an SEC filing.

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