Bill Ackman's Pershing Square Sticks To Its Guns On Call For Changes At ADP

This week, Pershing Square Capital’s Bill Ackman doubled down on his calls for change at Automatic Data Processing ADP, outlining a number of things he believes the company could do to unlock shareholder value. In a new slideshow presentation, Ackman clarified his calls for improving operating efficiency in ADP’s employer services segment.

“ADP can significantly improve its performance and competitive position with improved operational efficiency and greater technology leadership,” the presentation says.

Related Link: Whether Ackman Wins Or Loses His Battle With Management, He's Likely To Cause Change At ADP

Ackman estimates that ADP’s employer services could improve its operating margins from around 19 percent to at least 35 percent. In addition, employer services should be able to grow at a 7 percent clip rather than just 5 percent.

With some slight structural changes to the business, Ackman estimates that ADP could increase its earnings potential by 50 percent and achieve a per-share market value of between $221 and $255 within a four-year timeframe.

ADP management has been unreceptive to Ackman’s suggestions. In a recent interview with CNBC, ADP CEO Carlos Rodriguez took issue with the confrontational approach Ackman has taken toward the company by seeking a proxy battle and five seats on the company’s 10-member board.

Rodriguez said Ackman rejected an invitation from the company to meet with management and discuss his ideas privately.

Most importantly, Rodriguez said Ackman’s ideas for unlocking value don’t hold water.

“I think the facts speak for themselves--the performance that we have versus Pershing Square, the ideas which have been brought up which are not new to us and not new to the board of directors or to the management team,” Rodriguez said. “So I think it's a deeper issue than the manner and the form in which it was presented, but it was an odd way to approach a company.”

Since ADP first revealed Ackman’s push for control of the company in early August, ADP stock is down 2.2 percent.

Related Link: Highlights From Cramer's Interview With ADP's CEO Carlos Rodriguez

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