Brink's to consider Hedge funds' demands

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Thursday, February 1, 2007

RICHMOND, Va.--The Brink's Company on Jan. 8 announced it will respond to hedge fund Pirate Capital's demands--but not right now. Pirate Capital, a Norwalk, Conn., $1.7-billion hedge fund that owns about nine percent of Brink's Company stock, has advised Brink's to put itself up for sale. In a Jan. 4 SEC filing, it advised Brink's that it intended to nominate Thomas R. Hudson, Jr., manager of Pirate, and Pirate's general counsel, Christopher Kelly, for election to Brink's board of directors.
Brink's responded with a statement saying that it would review Hudson and Kelly's "respective credentials and qualifications in accordance with the company's well-established corporate governance policies."
Regarding the sale, "Brink's will present its recommendations regarding Pirate Capital's proposals in the company's definitive proxy statement, which will be filed with the Securities and Exchange Commission and mailed to all shareholders eligible to vote at its 2007 annual meeting of shareholders," the statement said.
When that filing will be made is unknown at this point.
Brink's typically holds its annual shareholders' meeting in late spring. The proxy statement for last year's meeting, held in May, was sent out on March 24, 2006.
Ed Cunningham, spokesman for The Brink's Company, said, "The date for the [2007] annual meeting has not been set yet."
Pirate's latest demands came three weeks after another hedge fund, MMI Investements of New York, urged The Brink's Company to consider putting itself up for sale.
Saying the company is "chronically undervalued," MMI Investments, which is by Clay Lifflander and owns about 8.3 percent of Brink's, in a Dec. 18 SEC filing urged the company to undergo a "strategic alternative review."
MMI said it hadn't spoken with Pirate Capital. However, it intends to support Pirate's push to get Brink's to sell.
It also follows--and not coincidentally, according to Jack Mallon, managing partner of Mallon Associates--the much discussed sale of HSM to Stanley Works for a historically high multiple.
"I think the investors see the high multiple paid for the alarm piece and figure that's how they can maximize their return," Mallon said. The "astronomical" multiple paid in that instance he said, "may have affected the timing of ... MMI's decision to turn up the pressure."
As he did when Pirate first started making noise about a sale, Mallon said that MMI is "off the mark in making the statement that Brink's is chronically and severely undervalued. They're somehow missing the fact that the stock has been on a tear." It's up 32 percent over the past 52 weeks, he said.
MMI, in a supporting document to the filing, mentions General Electric, UTC and Siemens, as well as a management buyout, as potential buyers.
Mallon discounts General Electric and UTC as not good fits and said Siemens and a management buyout, while possible, are not likely.