Activist investor Ackman buys into P&G, shares rise

Activist investor William Ackman looks ready to take on management at yet another major company as he builds a stake in the iconic U.S. household products company Procter & Gamble Co (>> The Procter & Gamble Company).

Activist investor William Ackman looks ready to take on management at yet another major company as he builds a stake in the iconic U.S. household products company Procter & Gamble Co (>> The Procter & Gamble Company).

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.

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

P&G, for its part, said it welcomed new investors.

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

Word that an activist investor is now circling the maker of Tide detergent, Pampers diapers and Crest toothpaste comes only a few weeks after P&G said that profits and sales will be lower as it struggles to navigate tough economic conditions.

The interest of Ackman, who has been instrumental in shaking up management at Canadian Pacific Railway (>> Canadian Pac.Railway) and retailer J.C. Penney (>> J.C. Penney Company, Inc.), saw P&G shares close 3.7 percent higher and helped the blue-chip Dow index cut its loss.

Procter & Gamble Chief Executive Bob McDonald, who has been at the helm of the Cincinnati-based company since 2009, has recently acknowledged missteps and the company is implementing programs to try and make itself more competitive.

"We are focused on creating shareholder value by executing on our plan to deliver top and bottom line growth through our $10 billion cost savings program, renewing our focus on innovation, pricing initiatives and improved execution, and reallocating resources to invest in the highest return opportunities," P&G spokesman Paul Fox said.

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," analysts at Caris & Co 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 (>> Berkshire Hathaway Inc.) is one of the top five shareholders.

Any shareholder who wants to present potential business-related proposals to the company faces a July 13 deadline which is 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 chief executive officer 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 (>> Apple Inc.) 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 and Matthew Goldstein)

By Svea Herbst-Bayliss and Jessica Wohl

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