Deals

Brooke Sutherland is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Bill Ackman has a plan for Automatic Data Processing Inc.  But we'll all just have to wait for it.  

The investor's activist campaign at the $50 billion provider of human-resources services has been swatted down by everyone from the company itself to the analysts that follow it and even former ADP board member Leon Cooperman. Part of the problem is that it was ADP, not Ackman, that first publicized his demands, apparently catching him flat-footed and armed with little detail to back up vague generalizations about the opportunity for "transformational change" and a 50 percent increase in its profit margins.

It's just not clear what he might do to bring about such an improvement -- or whether ADP even needs his help. So much was riding on Ackman's future statements about the investment. Instead, on Monday, we got more generalizations about "an enormous opportunity to improve ADP’s operations, profitability and competitive position." Ackman's Pershing Square Capital Management's secret plan to boost ADP's stock price won't be unveiled until Aug. 17 at 9 a.m. when it hosts a webcast for investors. Get your popcorn ready.

Where to From Here?
ADP initially spiked on news of Ackman's interest but has given up some of those gains as investors question how much of an impact he can have
Source: Bloomberg

Ackman did give us the names of those he would like to nominate to the board: Veronica Hagen, the former CEO of Polymer Group Inc. and a director at utility company Southern Co.; Paul Unruh, a former executive at Bechtel Group and a director at software company Symantec Corp.; and Ackman himself.

On the face of it, those all seem like perfectly fine candidates but it's not clear what expertise they offer that ADP's current board lacks. Never mind that ADP is already trading near a record and has surged past analysts' average price target, with several noting that whatever margin expansion and operational improvements are possible are likely already factored into the shares' gains or would come at the cost of revenue growth.

What this does for Ackman is get his nominations for the board in ahead of the Aug. 10 deadline that ADP refused to push back on his behalf. Notably, he's proposing three directors in total, not the five ADP said he was originally seeking.

This campaign still seems a bit half-baked.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Brooke Sutherland in New York at bsutherland7@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net