Ackman Cranks Up Pressure on ADP -- Update

By Tripp Mickle Features Dow Jones Newswires

LAGUNA BEACH, Calif.--Activist investor William Ackman turned up the pressure on Automatic Data Processing Inc., saying the company has "missed the market" by focusing more on meeting revenue guidance than developing new technology.

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The founder of Pershing Square Capital Management LP in August took a roughly $4 billion stake in human-resources software firm ADP and has said the company can double its stock value by building up its own software capabilities. He is lobbying for three seats on the board for himself and two other Pershing Square nominees ahead of a Nov. 7 vote.

"There's no ownership culture in the board room," Mr. Ackman said on Tuesday of ADP during in an interview at The Wall Street Journal's WSJ D.Live technology conference.

He said the company's culture was too focused on "making its numbers" and added, "They spend more than the entire industry does on developing products and software and much smaller competitors ...have better products than ADP."

ADP has resisted Mr. Ackman's activist efforts, rejecting his bid for a board seat in August. Instead, it nominated its 10-person board for re-election.

Mr. Ackman, who typically places big bets on only a handful of companies, has had a difficult run lately. He took a roughly $4 billion loss in March when he sold his stake in Valeant Pharmaceuticals International Inc., and his five-year-old bet against supplement maker Herbalife Ltd. continues to drag on. He did have gains on Canadian Pacific Railway Ltd. and once bankrupt developer GGP Inc.

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Though he has taken an interest in ADP, Mr. Ackman said he doesn't foresee himself making more technology-related investments because "the companies are so dynamic that it's hard to predict the future." He said ADP was different because it is a services business based on long-term relationships with companies that would incur high costs by switching to rivals.

Mr. Ackman also waded into the controversial practice of issuing nonvoting or low-voting stock, favored by technology companies. He said that structure could work when the founder is still involved in the business but "after the founder retires, it should convert to one vote one share."

Write to Tripp Mickle at Tripp.Mickle@wsj.com

LAGUNA BEACH, Calif.--Activist investor William Ackman turned up the pressure on Automatic Data Processing Inc., saying the company has "missed the market" by focusing more on meeting revenue guidance than developing new technology.

The founder of Pershing Square Capital Management LP in August took a roughly $4 billion stake in human-resources software firm ADP and has said the company can double its stock value by building up its own software capabilities. He is lobbying for three seats on the board for himself and two other Pershing Square nominees ahead of a Nov. 7 vote.

"There's no ownership culture in the board room," Mr. Ackman said on Tuesday of ADP during in an interview at The Wall Street Journal's WSJ D.Live technology conference.

He said the company's culture was too focused on "making its numbers" and added, "They spend more than the entire industry does on developing products and software and much smaller competitors ...have better products than ADP."

ADP has resisted Mr. Ackman's activist efforts, rejecting his bid for a board seat in August. Instead, it nominated its 10-person board for re-election.

In a letter to shareholders earlier this month, the company said that Pershing Square's "extreme and ever-changing views would put ADP's business at risk" and said Mr. Ackman's firm has a history of "destroying shareholder value."

Mr. Ackman, who typically places big bets on only a handful of companies, has had a difficult run lately. He took a roughly $4 billion loss in March when he sold his stake in Valeant Pharmaceuticals International Inc., and his five-year-old bet against supplement maker Herbalife Ltd. continues to drag on. He did have gains on Canadian Pacific Railway Ltd. and once bankrupt developer GGP Inc.

Though he has taken an interest in ADP, Mr. Ackman said he doesn't foresee himself making more technology-related investments because "the companies are so dynamic that it's hard to predict the future." He said ADP was different because it is a services business based on long-term relationships with companies that would incur high costs by switching to rivals.

Mr. Ackman also waded into the controversial practice of issuing nonvoting or low-voting stock, favored by technology companies. He said that structure could work when the founder is still involved in the business but "after the founder retires, it should convert to one vote one share."

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

October 17, 2017 16:51 ET (20:51 GMT)