A hedge-fund investor with a substantial stake in McDonald's Corp. went public Tuesday with his proposal for a shake-up to wring more value out of the company's real estate, contending it could drive up the stock price as much as 50 per cent within six months.

In a detailed presentation aimed at showing Wall Street how much the fast-food company's stock is undervalued, William Ackman, managing partner of Pershing Square Capital Management LP, said McDonald's should spin off 65 per cent of the 8,000 restaurants it owns and borrow $14.7 billion (euro12.6 billion) against its real estate.

Those moves, he told a New York investment conference, would push McDonald's stock up from $45 per share to $50 per share and improve management focus and incentives at both the real estate-centred McDonald's and the new unit.
The Oak Brook, Illinois-based chain owns 37 per cent of the land beneath its more than 30,000 McDonald's restaurants worldwide.

Pershing bought a 4.9 per cent stake in McDonald's in September, although specific details of its holdings in shares and options have not been disclosed. Ackman, who has said McDonald's resisted his proposal, purchased a stake in Wendy's International Inc. this year and pushed it to sell real estate and spin off its Tim Hortons coffee-and-doughnut chain.

McDonald's has said it is not interested in a corporate restructuring. But despite their differences, Ackman praised the management of the company.

"This is not a case at all where we think McDonald's is doing a bad job," Ackman said in an hour-long speech to the Value Investing Congress that was accompanied by slides and broadcast on the Internet. "Quite the opposite - we like management."

He called McDonald's "a very shareholder-friendly company. ... So far we just haven't gotten the right idea, but we're getting close."

Shares in the company fell 24 cents, or 0.7 per cent, to $33.69 in trading on the New York Stock Exchange. The stock is up about five per cent this year, thanks largely to an upswing since the Pershing stake and activist intentions became known in mid-September.

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