In one corner: An activist investor used to getting his way. In the other: A retail giant battling a slump. At stake: Target’s board of directors – and possibly a whole lot more.

For a company that has made such beauty out of a simple bull’s-eye, it is a painful irony: Target, the $65 billion retail giant, has itself become a target. Wielding the bow and arrow is William Ackman, the activist investor and founder of Pershing Square Capital Management, who sank $2 billion of his investors’ money into the company back in 2007 – just before the global recession hit the fun- and fashion-loving Target shopper.

Now Ackman’s investment, partly in options, is off 85%, and the company’s own share price is down 41% from its July 2007 high, while rival Wal-Mart is up 3%. The relationship between the investor and his investment that was once a public lovefest is looking more like a bar brawl.

On March 17, Ackman launched a proxy battle for five of Target’s board seats. He claims that the company’s directors lack expertise in retailing, credit cards, and real estate — all skill sets that would have helped it navigate the difficult economic climate.

“The deficit of experience on Target’s board has contributed to the company’s underperformance,” writes Ackman in the letter he sent to shareholders.

Meanwhile Target’s CEO, Gregg Steinhafel, has portrayed Ackman as a short-term investor who cares nothing for the company’s core business and who launched the fight only because Target (TGT, Fortune 500) passed on his “risky and speculative” plan to spin off the company’s real estate holdings.

Read the full article by Jennifer Reingold “Taking aim at Target” at CNNMoney.com (May 11 2009)

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