J.C.Penney altered its poison pill plan on Tuesday as it seeks to defend itself against potential activist investors and preserve a tax benefit.
The company lowered the threshold for its poison pill plan to 4.9 percent from 10 percent. It also said it had extended the plan until Jan. 26, 2017. The provisions were originally set to expire this August.
The threshold now requires investors to receive board approval to purchase more than 4.9 percent of the company’s shares. Not doing so would activate the poison pill, which would flood the market with shares of the company and dilute investors’ interest.
Existing shareholders who currently hold 4.9 percent or more of the company’s stock would be subject to the amendments only if they tried to buy additional shares.
The new plan takes effect immediately and will be subject to a shareholder vote in May.
J.C.Penney said that the poison pill changes were meant to protect its net operating loss carry forwards, or N.O.L.’s, which allow companies to offset future taxable income and liabilities. The retailer said it had $2 billion in such carry forwards.
J.C.Penney is still struggling to recover after a turbulent run with the activist investor William A. Ackman.
Mr. Ackman, who runs the hedge fund Pershing Square Capital Management, sold his roughly 18 percent stake in J.C.Penney in August after resigning from the board weeks before. The move effectively cut all ties between Mr. Ackman and the retailer, which suffered after adopting changes for which Mr. Ackman had agitated.
Mr. Ackman enlisted Ron Johnson, the former architect of Apple’s retail strategy, as the company’s chief executive. But Mr. Johnson’s strategy, like expensive renovations and the elimination of discount sales, ended up backfiring. The company ousted Mr. Johnson after just 17 months and replaced him with his predecessor, Myron E. Ullman III.
J.C. Penney’s stock has toppled nearly 80 percent over the last two years, and the company announced this month that it would shed about 2,000 jobs and close 33 stores.
Several companies have recently taken defensive steps to protect themselves against activist investors, who have stepped up their activity. Investors like Daniel S. Loeb and Carl C. Icahn often purchase shares in companies they intend to shake up.
Jos. A. Bank and Men’s Wearhouse, which share a number of the same investors, have both amended their poison pill provisions in their continuing takeover battle. Hertz, the car rental company, adopted a poison pill provision in December, citing “unusual and substantial activity†in the company’s shares.
