J.C. Penney Co. Inc. is enacting a one-year "poison pill" in an effort to ward off hostile takeovers in the wake of activist investor William Ackman taking a large stake in the company.

Ackman and his hedge fund Pershing Square Management on Oct. 8 disclosed a nearly 17 percent stake in J.C. Penney. Pershing Square owns about 39.1 million shares of J.C. Penney's stock, according to a filing with the Securities and Exchange Commission. The same day, Vornado Realty Trust disclosed a 9.9 percent stake and said it would consult with Pershing Square.

The department store chain said Monday that it enacted the shareholder rights agreement because of recent stock purchases and to ensure fair treatment of stockholders, a clear reference to Ackman's move.

A poison pill defends against takeovers by diluting the holdings of the would-be acquirer.

J.C. Penney declared a dividend of one right on each outstanding share of its common stock. Each right allows the holder to buy a fraction of a share of participating preferred stock having economic and voting terms similar to its common stock, with an exercise price of $130 per right.

The right can be exercised if any person or group buys 10 percent or more of J.C. Penney's common stock. For a person or group that currently owns 10 percent or more of the retailer's stock, the right can be exercised if the person or group acquires additional shares.

The rights expire on Oct. 14, 2011.

Ackman has pushed for major changes at retailers he holds stakes in, such as Borders Group Inc. and Target Corp.

In the SEC filing, Ackman said J.C. Penney's stock is undervalued and he plans to discuss "business, assets, capitalization, financial condition, operations, governance, management, strategy and future plans," with the company.

J.C. Penney runs more than 1,100 department stores in the U.S. and Puerto Rico. The chain's stock dipped 36 cents to $33.51 in premarket trading.

J.C. Penney has struggled a bit to find its way during the economic slowdown. The retailer has cut inventory and introduced more exclusive store-label brands, hoping to offset consumer spending weakened by the uncertain economy and high unemployment.

In August the company, based in Plano, Texas, posted a second-quarter profit, but had nearly flat revenue and cut its profit outlook for the rest of the year. But earlier this month J.C. Penney reported a key revenue figure rose more than expected in September, fueled by back-to-school purchases.