Live-Blogging The Pershing Square Presentation

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1:28: Nothing happening yet. Jazz is playing
1:31: Ackman in the house. "I'm supposed to say we have a 75 cash settled call position on Target...inside joke."
1:31: This is not "activist v company." We've had a wonderful dialogue. This is a great management team.
Where do we stand now? In May we made a presentation. We're trying to iterate a solution to a problem we've identified. The company has raised some concerns. We've made adjustments to the transaction
-Shout-out to advisors UBS and Sullivan & Cromwell
-Real estate side of Target = "superb assets." 95% of the buildings are owned. Own 84% of distribution centers. Known for keeping stores and parking lots clean.
-Target owns highest percentage of its real estate compared to other big box retailers.
-What if Target were to rent its real estate?


Objectives:
-Eliminate the stock market's ascribed discount to the intrinsic value of Target's real estate and allow the company to: retain control of buildings and brand (mentions again the cleanliness of parking lots), 100% flexibility with respect to construction etc, improve company's free cash flow and access to capital, increase company's ROIC ad lower its cost of capital, maintain investment grade credit rating, increase EPS growth rate, minimize tax leakage ("as much as we are patriotic Americans)
- "Pershing has solved the simultaneous equations that need to be solved"
- "What we've got will create tremendous shareholder value"
- Spin off a REIT that will own the land, Target maintains control of building for 75 years
- Target has a partner that will put up the money for land...there'll be a close working relationship
On the webcast, his lips aren't lining up to the words coming out of his mouth
- "Execution not impacted by current markets"
- "No question" that Target that will be able to make rent
- "TIP Reit" (the lessor) will be responsible for stuff like cleaning the parking lots
Jokes about his pointer not working
- Target today is trading around $40/share, do this deal, bam: $70/share. 12 months later: $83/share. Other benefits of doing what I say:
-Control over buildings and brand
-Improves T's access to capital, reduces capital needs moving forward
-Creates non-cash currency for tax-efficient real estate acquisitions
-Improves management focus on core operations
-Tax-free spin off
-Increases total free cash flow
-Improves stove-level ROIC and Target's EPS growth rate
-Maintains investment grade credit rating profile
-Increases total dividends from .60/share today to 1.86/share in 2009E
-Enormous value creation
"Today, only the most stable and unlevered (ick) businesses can freely access the debt and equity capital markets. TIP REIT will be one of the most stable companies in the world today."
"My dad asked me what he should do with his money. I said BUY TIP REIT!"
"Every business is like a bank. This transaction hugely increases return on assets, hugely decreases return on liability."

-High demand for liquid, inflation-protected, income-oriented securities that offer higher yields than TIPS
"I apologize for drinking so much but I need to lubricate the voice."
2:45 "I know you guys want to jump out of your seats and go buy the stock--that's why you have Blackberries."
"There's supposed to be Kleenex here. I don't see any." [spots 'em. blows nose into mic, apologizes to people listening in on the phone]

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