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Hedge Fund Honcho to Chair Borders

Date: Wednesday, January 14, 2009
Author: James Armstrong, Hedge Fund Correspondent, Markets Media Online

Books and music retail chain Borders Group on Tuesday announced it is elevating a board member from hedge fund firm Pershing Square Capital Management to become the company's new chairman.

Richard McGuire, a partner at Pershing Square and a Borders board member since only last year, will replace Larry Pollock, who has been chairman since 2006 and on the board since the mid-1990's. McGuire is leaving Pershing Square as of the announcement, and a source at the firm said his departure is under amicable circumstances.

In a statement, Pershing Square founder William Ackman said he was "delighted" with McGuire's appointment as chairman. Pershing Square has a long history with Borders, which includes providing the company with financing, suggesting the sale of certain divisions and even considering a possible purchase of the entire retail giant.

The second-largest bookstore chain in the United States, Borders has been struggling for years in the shadow of rival Barnes & Noble. Last week, the company named turnaround specialist Ron Marshall as its new chief executive officer. Borders' stock opened at $0.65 per share on Tuesday and is facing a possible delisting from the New York Stock Exchange.

Pershing Square has been a major investor in Borders since 2006 and is currently its single largest shareholder. Until recently, Pershing had been a shareholder in Barnes & Noble as well, but according to a filing made on Friday, the firm has completely eliminated its stake in the rival bookseller.

Other major holdings of Pershing Square include retailer Target, IT infrastructure company EMC and beverage maker Dr Pepper Snapple Group. Its funds have seen major losses during the current economic crisis, particularly due to Pershing's large stake in Target, which has seen its stock drop from more than $57 per share in September to about $35 per share today.