Monday, May 11, 2009

Target's Questions for Pershing Square



MINNEAPOLIS, May 11, 2009 -- Target Corporation (NYSE:TGT) has suggested some questions that those attending today’s Pershing Square town hall may want to ask. Target shareholders deserve clear, straightforward answers to the following questions:

  • Pershing Square began pushing its risky REIT proposal in May 2008, including hosting town halls on October 29 and November 19, 2008. On November 21, 2008 the Target Board announced its decision not to pursue Pershing Square’s risky real estate proposal. Following this announcement, at a meeting on February 12, 2009, Bill Ackman continued to press Target to implement his proposal and stated that he believed he needed to join the Target Board to be able to effectively express his point of view. About one month later, Pershing Square launched its proxy contest in an attempt to get onto the Target Board. During the 20 months of discussions prior to the proxy contest with Target, Pershing Square never criticized Target’s Board or management. Why should Target shareholders believe that this proxy fight is about anything other than Pershing Square’s REIT proposal?
  • The highly leveraged and concentrated nature of Pershing Square’s investment strategy for its Pershing Square IV fund has led to huge losses for its investors. Pershing Square’s proposals for Target have involved adding substantial leverage. Does Pershing Square still think it is appropriate for a fiduciary of Target to advocate taking leverage to risky levels?
  • Pershing Square’s first proposal to Target on August 2, 2007, was for the Company to repurchase $15 billion in stock, which would have required billions of dollars in incremental borrowings. We believe this would have meaningfully degraded Target’s credit rating and significantly impaired its ability to raise capital. With the benefit of hindsight, does Pershing Square agree that its proposed course of action would have been financially irresponsible for Target?
  • Has Bill Ackman discussed with his corporate governance expert, Professor Ronald Gilson, Jim Donald’s plan to abandon Rite Aid’s Board after only one year if Mr. Donald is successful in getting onto Target’s Board? What does that say about Jim Donald’s and Bill Ackman’s commitment to shareholders and good corporate governance? In addition, we are curious why Jim Donald’s willingness to drop from the Rite Aid Board, if elected to Target’s Board, was not included in Pershing Square’s bio of Jim Donald in the RiskMetrics Group presentation.
  • We believe both Target and Wal-Mart are great retailers, each of which has created a lot of value for its shareholders. The Target stock has outperformed Wal-Mart over a 10 year period, a 5 year period, and in 2009 to date. We note that Pershing Square has “cherry picked” time periods in order to claim that Target has underperformed. Isn’t it obvious that Pershing Square has done this in order to try to put Target in the worst light possible?
  • The share price of Borders Group, Inc. has declined by 73% since one of Pershing Square's partners was appointed to the board on January 17, 2008. Is this the reason Borders was not included in the list of Pershing Square investments in the Pershing Square definitive proxy statement?
  • Target’s 2006, 2007 and 2008 Annual Meetings were held in fully constructed, soon to be opened stores. Does Pershing Square truly believe that the Waukesha, WI store will not be in the same great condition for Target’s 2009 Annual Meeting? And does Pershing Square really think that Waukesha, a Milwaukee suburb, does not have internet or cell phone service that Pershing Square can access?