BOSTON/NEW YORK (Reuters) – Activist investor William Ackman laid out his case for changes at Automatic Data Processing Inc (ADP.O) on Thursday, saying the payroll processor needs to improve its profit margins and integrate its business lines.
Ackman’s hedge fund Pershing Square Capital Management disclosed earlier this month an 8 percent holding in the $50 billion U.S. human resources outsourcing company and nominated three directors to serve on its board.
ADP has strongly resisted the approach, refusing Ackman’s request to extend the company’s director nomination deadline and publicly criticizing the investor and his strategy.
Ackman said in a conference call the company has underperformed its competitors and failed to properly integrate the products it has amassed through acquisitions.
“ADP’s margins are vastly below what they should be,” Ackman said on the call, saying the stock price could double in five years without the company needing to change its dividend, capital structure or credit rating.
Reporting by Svea Herbst-Bayliss in Boston and Michael Flaherty in New York; Editing by Meredith Mazzilli