Target Corporation TGT
The three reasons
- 1
Target trades at only 5.8x '09E EV/EBITDA while REITs trade 14.5x-35.7x — 22% of EBITDA mispriced
- 2
Tax-free REIT spin unlocks 77-81% upside, taking stock from $37 to $67 now and $79 by 2010
- 3
Revised <20% IPO structure preserves 'A' credit rating, adds an unwind mechanism, addresses every mgmt concern
Primary demands
- Form Target Inflation Protected REIT (TIP REIT) holding land and Facilities Management Services
- Execute a 75-year Master Lease from TIP REIT to Target Corp
- Complete a primary IPO of <20% of TIP REIT
- Sell remaining 53% interest in credit card receivables
- Pay down ~$9bn of Target Corp debt using IPO and credit card proceeds
- Tax-free spin-off of remaining >80% interest in TIP REIT to shareholders
- Purge retained E&P via a ~$1.6bn cash dividend post-spin
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (10)
Notes
Second presentation in the Pershing-Target campaign, delivered 3 weeks after the Oct 29 2008 'TIP for Target Shareholders' deck. Classic dialectical structure: restate own prior thesis, quote target-management's 5 objections verbatim, then present a Revised Transaction (<20% IPO + later spin) that methodically addresses each concern. Tone is notably collaborative rather than adversarial — Pershing thanks Target for 'candid feedback' and frames the revision as incorporating investor+mgmt input. Management concerns are quoted directly (slides 22-23) but used to structure rebuttal rather than to expose contradiction, so uses_ceo_quote_contradiction coded False. The Pre-Spin/Post-Spin org-chart pair (slide 7) and stacked bar valuation summary (slide 9, $37->$67->$80) are signature slides. Rich appendix includes full 20-year DCF model for the land developer, TIP-like security valuation via CDS spread, and Target Corp three-statement model (pages 76-79). The campaign was ultimately unsuccessful — Target's board rejected the proposal in early 2009 and Pershing's TGT position became one of Ackman's biggest losses, which is part of what makes the deck historically notable.