Bill Ackman just scored a major win with Longs Drug Stores (LDG) last night. CVS (NYSE:CVS) announced that it would acquire the drug store chain for $71.50 per share, a significant premium to the $54.04 close.
On August 5th, Ackman's Pershing Square disclosed an 8.8% stake (3,137,659 shares) in the company. Ackman also has 5,296,896 notional shares underlying certain cash-settled total return swaps, bringing his total economic exposure to 8,434,555 shares of Common Stock (approximately 23.6% of the outstanding shares of Common Stock).
Ackman paid $136,609,962 for these positions. The total value of the shares Ackman controls, at the buyout price of $71.50, is worth $603,070,682.
As Ackman just started accumulating shares in late June and July in the $40 range, this is an amazing windfall for Ackman and may go down as one of the 'best trades ever.'
Bill Ackman's Pershing Square hedge fund is a long/short equity fund with an activist bent. Ackman holds large positions in Target (NYSE:TGT) and Borders (BGP), among others. Ackman proved his acumen as a short seller in 2007/2008 as short positions he held in MBIA (NYSE:MBI) and Ambac (ABK) proved to be big winners due to the credit crunch.