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Target takes a pass


Target declined a CNBC invitation to appear alongside Bill Ackman yesterday morning as he offered up reasons why investors should vote for his alternate slate of directors. However, the company couldn’t let his assertions go unchallenged, so 15 minutes before Ackman was scheduled to preside over a town hall meeting in Manhattan, a press release was put up titled, “Questions that attendees may want to ask at the Pershing Square town hall.”

The questions were of little use to anyone actually attending the meeting, but had greater value for media outlets covering the issue, as the release enabled Target to provide useful background by asking questions that were largely rhetorical in nature. That much was evident in the very first question, which asked, “Why should Target shareholders believe that this proxy fight is about anything other than Pershing Square’s REIT proposal?” Other questions sought to call attention to details that Ackman has failed to mention and sought to position him as a careless risk-taker with a less-than-stellar track record. For example, Target asserts that investors in the Pershing Square IV fund have experienced a huge loss due to a concentration of risk and asked, “Does Pershing Square still think it is appropriate for a fiduciary of Target to advocate taking leverage to risky levels?” Along similar lines, the company noted that Pershing Square proposed Target repurchase $15 billion in stock in 2007 and asked, “With the benefit of hindsight, does Pershing Square agree that its proposed course of action would have been financially irresponsible for Target?”

Other questions weren’t questions at all, but were more like editorial statements. Pershing Square has asserted that Wal-Mart has outperformed Target, when the opposite is true for the past 10-year, five-year and year-to-date periods, and Pershing Square cherry-picked time periods to show otherwise. “Isn’t it obvious that Pershing Square has done this in order to try to put Target in the worst light possible?”

Of course. Ackman has to stoke dissention among shareholders who tend to be apathetic toward the election of board members to secure votes for his alternate slate.

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