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(Name of Registrant as Specified In Its Charter)
Pershing Square, L.P.
Pershing Square II, L.P.
Pershing Square International, Ltd.
Pershing Square IV Trade-Co, L.P.
Pershing Square IV-I Trade-Co, L.P.
Pershing Square International IV Trade-Co, Ltd.
Pershing Square International IV-I Trade-Co, Ltd.
William A. Ackman
Michael L. Ashner
James L. Donald
Ronald J. Gilson
Richard W. Vague
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Transcript Excerpt from a March 16, 2009 Bloomberg News Interview with William A. Ackman
Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd., Pershing
Square IV Trade-Co, L.P., Pershing Square IV-I Trade-Co, L.P., Pershing Square International IV
Trade-Co, Ltd. and Pershing Square International IV-I Trade-Co, Ltd. (collectively Pershing
Square) and the other participants named herein are filing the materials contained in this Schedule
14A with the Securities and Exchange Commission (the SEC) in connection with the solicitation of
proxies with respect to the election of a slate of director nominees proposed by Pershing Square
at the 2009 Annual Meeting of Shareholders (the Annual Meeting) of Target
Corporation, a Minnesota corporation. Pershing Square has not yet filed a proxy statement with the
SEC with respect to the Annual Meeting.
On March 16, 2009, William Ackman, the founder and managing member of the general partner of
Pershing Square Capital Management, L.P., had a television interview with Margaret Popper, a
reporter for Bloomberg News. The following is a transcript excerpt from the interview:
MARGARET POPPER, REPORTER, BLOOMBERG NEWS: Thats right, Im here with Bill Ackman. And Bill,
the question of the day is youve lost 93 percent on your Target investment, youve got this fund
thats only invested in Target. How do you turn that around?
WILLIAM A. ACKMAN, PERSHING SQUARE CAPITAL MANAGEMENT, L.P.: Sure. Actually just to clarify,
we have a separate fund, a co-investment vehicle called Pershing Square IV, which owns a levered
interest in Target through options. Its down 93 percent actually its done thats at the low.
So its bounced somewhat since then.
We also have an investment in our main funds. We own the stock directly. Neither have been
good investments, but the overall picture is not down 93
POPPER: So how do you fix it?
ACKMAN: We fix it by actually adding some directors to the board of Target. And today later
today were going to announce that were proposing four actually five directors for the board.
POPPER: And who are these guys?
ACKMAN: We if you look at Targets board, its a group of, I would say, outstanding
executives. But interestingly, if you think about Targets business, there are three businesses.
Principally retail, next in terms of scale of the business real estate, and lastly credit cards.
ACKMAN: But if you look at the board, the only executive with real retail experience is the
CEO. So there are no independent directors with meaningful retail experience.
So first were going to propose Jim Donald. Jim Donald is the former CEO of Starbucks. Prior
to that, hes had enormous experience in the food retailing industry.
POPPER: He was at Wal-Mart.
ACKMAN: He was at Wal-Mart. He was hand picked by Sam Walton actually to help build out their
grocery business. So hes got big-box grocery experience. Hes got really has experience at
So hes really an outstanding retail executive. And we think he can bring enormous value to
Target, particularly with respect to the food retailing part of the business.
POPPER: You want to see them build out food?
ACKMAN: Well its something its an initiative the companys really already underway.
Traffic is critically important, particularly in a difficult environment. People are still buying
food. And when they go in to buy food, they might walk by some apparel and that actually helps the
frequency and helps drive sales.
I think Wal-Mart has been a beneficiary having a much larger food component than Target. And I
think he can be a big help.
POPPER: All right, so weve got Donald. Who else?
ACKMAN: An executive named Richard Vague. Richard Vague started a company called First USA.
First USA became a public company. It was, I think, the best performing financial stock for a
number of years, on the New York Stock Exchange, prior to the sale to I guess ultimately it was
to JPMorgan, was bought by Bank One. It now comprises a big portion was the foundation of the
credit-card business at JPMorgan.
this is a business that frankly Target could use some help in.
POPPER: And what do you want to see Vague do there?
ACKMAN: Well again, hes got specific what I call domain expertise. Theres no one on the
board there is a bank chairman, Richard Kovacevich is a bank chairman, but hes not really a
credit-card expert in the way that Richard Vague is. And I think thats an area where we can be
helpful to Target. So thats credit cards.
And then number three, real estate. We think, and weve thought for a while that its a very
significant opportunity in Targets real-estate business. Its not something that the market gives
Target any credit for.
We had developed a transaction that we think would create a fair amount of value, which so far
weve not been successful convincing the company. But I think part of that is that theres no one
on the board with any real real-estate background.
Were proposing Michael Ashner. Michael is, in addition to being the CEO of New York Stock
Exchange real estate investment trust, hes a major owner, operator, manager of real estate. So
hes both a
POPPER: So his company is Winthrop? Is that -?
ACKMAN: Winthrop, yes. Hes got a public company called Winthrop, and hes got a private -
large private management business. And hes really both an operating executive in real estate, as
well as an investor in real estate.
POPPER: So you want to see him manage that REIT strategy that you were talking about, or help
ACKMAN: Well I think he could certainly give the board perspective from a real-estate persons
point of view as to whether our strategy or another one is a good idea, with respect to real estate
for the company.
So those are four. Myself Im proposing myself to the board. What I bring to the board is
number one, were obviously a large shareholder. There are no large shareholders on the board of
Target. And obviously getting a 7-8 percent shareholder on the board, I think is good from a
shareholder point of view.
Also Ive got a fair amount of experience working with companies on increasing the value of
their businesses over time.
POPPER: One more then.
ACKMAN: One more slot, Ron Gilson, were proposing. Ron is a hes a professor at both
Stanford and a joint appointment at Columbia University. His expertise is corporate governance,
corporate finance. Hes a business persons lawyer. And hes very highly regarded arguably top
one or two in his field.
POPPER: OK. So youre proposing these guys. Is this going to be a proxy battle now? Because
youd said you werent going to go there.
ACKMAN: I didnt think we were I wouldnt call it a battle. I would say the following.
Its interesting, in America when theres an election, theres usually at least two
candidates, except for corporate boards. Its kind of what I call a the only Stalinesque election
process in America.
So really what were going to do is were going to propose there are five open seats. Were
going to propose five outstanding candidates. Theres myself, four totally independent directors.
We have no agreements or understanding for them about frankly I havent even spoken to them in
any kind of detail about our real estate -
POPPER: But all these guys have agreed to run for the board at this point, right?
ACKMAN: Thats correct.
POPPER: Right, OK.
ACKMAN: Thats correct.
POPPER: And whats Target you have been talking to Target. Youve tried to get them to allow
you to nominate somebody. And I guess those negotiations broke down
ACKMAN: We proposed adding two people to the board. We met with the chairman of the nominating
committee and another member of the nominating committee. And had a lovely meeting, but ultimately
they came back to us and said that they wouldnt approve either one of our nominees.
POPPER: And why was that?
ACKMAN: They didnt say.
POPPER: OK. So this board change, you think, fixes the issues at Target, or helps you to fix
the issues at Target? Youre still pushing your real-estate strategy, talking to the company about
that. Where do those talks stand?
ACKMAN: I think at this point I would say were not pushing a real-estate transaction. Were
really focused holistically on each element of the business. Retail, real estate, credit card.
And I think that board members with significant operating and relevant expertise can be
helpful to the company. And I think the CEO, if he could say so, I think, would welcome people with
experience relevant experience in each of these areas to his board.
Do you like the CEO or do you want to see this board take him
ACKMAN: Very much. This is not your classic proxy contest or proxy battle, as you were
describing, in the sense that we this is a company we have a very high regard for. This is a
management team we have a high regard for.
These are individuals on the board that are theyre outstanding executives in their
But we think this board at this stage of the world, particularly in a difficult economic
environment with the credit business under a lot of challenge, with real estate an opportunity for
them to explore, or even on the retail side, theyve really and I would say our disappointment
with Target on the retail side is we thought Target would be where Wal-Mart has been during these
difficult economic times.
Our view is Targets a very its a great business. Its very inexpensive, high-quality
POPPER: But its got a concentration in clothes, which during a downturn do worse
traditionally than some of the other stuff that Wal-Mart sells, right?
ACKMAN: Yes, but still we feel like the business is underperforming where it should. So I
think that having executives with experience we think would be very, very helpful to the company.
If you look at the existing board, there are executives with telecom experience, theres but
the slate that were competing against is theres a woman from McDonalds on the marketing side.
I think Target really does an outstanding job on marketing. Theres a telecommunication executive.
But there isnt retail, real estate, credit cards. And thats where they need some help.
POPPER: Right. Now what do you you must have an agenda, because you always do have a cleanup
agenda. These companies that you get involved in, we know that you want to do you want them to
spin off their real estate into a REIT and lease it back. What do you want to see them do with
ACKMAN: We, when we met with Target, we took a position initially our first initiative with
Target was really to get them out of the risk associated with the credit card business. And the
risk comes from two forms.
One, credit risk. And the second, from funding risk. They need to access capital to fund the
growth, or even the existing assets in the business. And we made a presentation to the company in
early August of 2007. About a month or -
They sort of implemented part of that, right? They
ACKMAN: They hired Goldman Sachs. They ran a process. But they did not shift the credit risk
away from Target to the banks. What they chose to do and instead, I think they wanted to keep
control of underwriting. And obviously if you keep control of underwriting, its very hard to get a
bank to assume the credit risk.
And so now Target unfortunately is still stuck with the credit risk. And still stuck with half
POPPER: youd get rid of the rest of that, even though potentially in this market youre
going to get a terrible price?
ACKMAN: Well, its not clear today that, in light of how the world has changed, that they can they certainly cant do the deal they could have done a couple of years ago. But its something
thats worth a close inspection. And perhaps there is a transaction that can be done, or at least
theres a way to optimize the business beyond its current state.
POPPER: Let me ask you about your shareholders in this fund. You told them in March that they
could redeem shares. Did you get a lot of redemptions?
ACKMAN: Most of the investors elected to stay. And when you have an entity, even a 2-1
leveraged single stock entity down 90 percent, its nothing to be proud of. And we had at least a
couple investors who wanted to exit. And you cant just let one or two people out without letting
everyone out. So we tried to do whats fair.
And whats fair is we allowed everyone out who wanted to get out. We allowed everyone who
wanted to add to their investment to add. I made a very significant
POPPER: $25 million yourself.
ACKMAN: $25 million, which is a lot of money. And a number of other investors added capital.
We used the new money to redeem the old investors, plus some sales of some options.
POPPER: So how long can this fund stay open at this point? What are your investors telling you
in terms of what they want you to do with Target? And are they asking you to pare down as soon as
ACKMAN: No. The investors the good thing about going through a process like this is the
people who are sticking along are in, are in to win, so to speak. This is an investment that
were going to own probably for several or more years. And theres a lot of opportunity from here.
I think if we if nothing for if were completely unsuccessful, I still think its going to
be a decent investment over the next couple of years. But if we can get a real estate transaction
done, if theres some opportunities on the credit card side, if perhaps there are opportunities on
the overhead structure of the business, there are lots of different areas that are worth looking
at, I think, as a
Had I been on the board at the time they were looking at a credit card are you running out
POPPER: Yes, sorry. Were running out of time here, Bill. But thank you for talking to us
about your new strategy with the Target board.
* * *
In connection with Targets 2009 Annual Meeting of Shareholders, certain affiliated funds of
Pershing Square Capital Management, L.P. expect to file a proxy statement and other materials with
the Securities and Exchange Commission (the SEC). SHAREHOLDERS OF TARGET ARE URGED TO READ THE
PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. The proxy statement and other documents relating to the
solicitation of proxies by affiliates of Pershing Square will be available at no charge on the SECs website
at http://www.sec.gov. In addition, Pershing Square will provide copies of the proxy statement and
other relevant documents without charge upon request. Request for copies shall be directed to the
proxy solicitor of Pershing Square, D. F. King & Co., Inc. at 1-800-290-6427.
affiliated funds of Pershing Square and certain of their members and
employees and Michael L. Ashner, James L. Donald, Ronald J. Gilson and Richard W. Vague
(collectively, the Participants) are deemed to be participants in the solicitation of proxies
with respect to Pershing Squares nominees. Information regarding the Participants will be
available in the proxy statement when it is filed with the SEC.
Cautionary Statement Regarding Forward-Looking Statements
This transcript contains forward-looking statements. All statements contained in this transcript
that are not clearly historical in nature or that necessarily depend on future events are
forward-looking, and the words anticipate, believe, expect, estimate, plan, and similar
expressions are generally intended to identify forward-looking statements. These statements are
based on current expectations of Pershing Square Capital Management, L.P. and its affiliates and
currently available information. They are not guarantees of future performance, involve certain
risks and uncertainties that are difficult to predict and are based upon assumptions as to future
events that may not prove to be accurate. Pershing Square does not assume any obligation to update
any forward-looking statements contained in this transcript.