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Ackman targets P&G

by Lou Whiteman  |  Published July 13, 2012 at 12:21 PM
PG_227x128.jpgActivist investor William Ackman has turned his attention toward Procter & Gamble Co. amid talk that the company's board is discussing the future of CEO Robert McDonald.

Two affiliates of Ackman's Pershing Square Capital Management LP on Wednesday received Federal Trade Commission clearance to invest in Cincinnati-based P&G, according to the agency's website. The FTC gave no detail on the size of the investment, and Pershing so far has not filed with the Securities and Exchange Commission.

The potential investment comes weeks after McDonald admitted that the consumer products giant, a maker of Tide detergent, Gillette razors, Duracell batteries and other consumer products, has underperformed its rivals. Analysts have complained that the company, which was hit hard by the downturn as consumers shifted toward off-label goods, has higher expenses than its rivals, leading P&G to launch a $10 billion cost-cutting plan. About 5,700 jobs will be eliminated by next year.

Shares of P&G were down about 8% on the year prior to word of Ackman's potential investment was made public.

Responding to P&G's troubles, P&G directors have been reaching out to former executives about potentially taking over as CEO, according to a Bloomberg News report. The board, including Boeing Co. CEO James McNerney, according to Bloomberg has expressed unhappiness over McDonald's performance, but directors reportedly do not see a clear internal candidate to replace him.

Ackman has had great success of late forcing change at iconic companies. Last year he attracted a new management team including one-time Apple Inc. retail executive Ron Johnson to take over at J.C. Penney Co., and earlier this year the investor won a proxy contest at Canadian Pacific Railway Ltd. and installed a hand-picked CEO.

P&G, with a market capitalization of $174 billion, will be difficult for any one individual fund to influence, however. Ackman will likely need the support of other large investors, including Warren Buffett's Berkshire Hathaway Inc., to pressure directors.

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Tags: CEO Robert McDonald | M&A | Procter & Gamble | William Ackman

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