Activist investor Ackman buys into P&G, shares rise

Stock Market Predictions

NEW YORK (Global Markets) - Activist investor William Ackman looks ready to take on management at Procter & Gamble Co (PG.N), building a stake as lackluster earnings have put the chief executive of the world's largest household products maker under pressure to do more.

Ackman's $10 billion Pershing Square Capital Management has been buying shares in P&G for the last few weeks and may want to increase its stake further, a person familiar with the portfolio said on Thursday.

The news comes three weeks after the maker of Tide detergent and Pampers diapers lowered expectations for profits and sales as it navigates tough economic conditions, with Chief Executive Bob McDonald acknowledging that missteps have been made.

Ackman has been instrumental in shaking up management at Canadian Pacific Railway (CP.TO) and retailer J.C. Penney (JCP.N) and his interest lifted P&G shares 3.7 percent higher and helped limit a decline in the blue-chip Dow Jones industrial average .DJI on Thursday.

According to a report from Bloomberg, P&G board members are not satisfied with McDonald's performance and are talking about a possible leadership change, citing people familiar with the situation. Ackman's decision to take a stake in P&G was partially prompted by the board's discussions, Bloomberg reported, citing one person.

Pershing Square received antitrust clearance from the Federal Trade Commission to purchase the shares according to a public notice.

P&G said it welcomed new investors.

ACKMAN'S INTEREST

The size of the stake has not been disclosed and may not become public until Pershing lodges a quarterly filing with the Securities and Exchange Commission.

McDonald, who has been at the helm of Cincinnati-based P&G since July 2009, unveiled a $10 billion restructuring program in February and is also is refocusing on core categories, countries and innovations.

But analysts have been more critical lately about McDonald's moves and speculated about how an activist might change things.

"From the beginning of McDonald's CEO-ship, we wrote that he should embark on more aggressive cost-cutting, which he did not do. He has finally now stepped it up when he was forced to do so," Caris & Co analyst Linda Bolton Weiser wrote in a note.

While speculation has swirled that Ackman might soon push for a new CEO to come in, as he has at other companies, analysts agreed that any potential management shakeup may not happen soon.

"I don't think his involvement will change anything really, right now," UBS analyst Nik Modi said of Ackman, explaining that McDonald has a few quarters to prove that he can change the course of things.

At P&G, Ackman will join a long list of other powerful investors including billionaire Warren Buffett, whose Berkshire Hathaway Inc (BRKa.N) is one of the top five shareholders.

Any shareholder who wants to present potential business-related proposals to P&G faces a July 13 deadline set by the company, months before its annual meeting later this year.

Ackman is moving on to P&G only a few months after scoring a big victory in Canada where he was able to unseat the CEO at Canadian Pacific Railway after winning a bitter proxy contest.

At J.C. Penney, Ackman was also instrumental in wooing Ron Johnson from Apple Inc (AAPL.O) to run the ailing retail chain. Ackman began building his Penney position two years ago but due to a sharp decline in the stock price, the position is currently hurting his portfolio.

(Reporting by Svea Herbst-Bayliss; Editing by Jeffrey Benkoe, Tim Dobbyn, Matthew Goldstein and Edwina Gibbs)