NEW YORK (Reuters) - Target Corp <TGT.N> on Friday rejected a proposal made by activist hedge fund manager William Ackman that the discount retailer boost its stock price by spinning off a real estate investment trust into a company that would own the land underneath its stores.

"Following a thorough review of the transaction outlined by Pershing Square ....the company has concluded that the potential value created, if any, is highly speculative and insufficient to merit pursuit of a transaction," Target said in a statement.

Ackman was not available for an immediate comment.

Target's shares closed up 8 cents at $28.08 Friday on the New York Stock Exchange.

Late last month Ackman, whose hedge fund firm Pershing Square Capital Management owns a stake of about 10 percent in the Minneapolis-based retailer, urged Target to spin off to shareholders a real estate investment trust that would own the land underneath Target's stores.

He said the deal would unlock the value of Target's real estate portfolio, which he put at $39.1 billion.

Target said the proposal raised serious concerns, and moving assets to a REIT entity could reduce its financial flexibility and hurt its debt ratings.

Ackman presented a modified plan this week that he said addressed Target's concerns, including allaying fears of a credit downgrade. He proposed on Wednesday that Target spin off 20 percent of the REIT in an initial public offering and use the money from the public offering to pay down debt.

Target said its management, board and outside adviser Goldman Sachs <GS.N> had reviewed the proposal.

"Target does not share Pershing Square's perspective that execution of this proposed transaction will generate measurable shareholder value over time," said CEO Gregg Steinhafel in a statement.

(Reporting by Nicole Maestri in New York and Svea Herbst-Bayliss in Boston; Editing by Bernard Orr)

Publié le 21 novembre 2008 Copyright © 2008 Reuters