Brink's investor urges subsidiary spin-off
NEW YORK--Major Brink's Company shareholder MMI Investments told the Brink's board that the best way to increase shareholder value would be a tax-free spin-off of either Brink's Home Security or Brink's Inc., and on April 2 filed an SEC report to this effect.
Noting that the two subsidiaries have different customer bases, financing and operational needs, Jerome Lande, system portfolio manager for MMI, said this would be a "win-win transaction for everybody." A spin-off would enable BHS and Brink's Inc. to have "greater flexibility to do what's in its own best interest from an operational, capital, partnering, strategic activity, any of these different perspectives: it doesn't have to consider the needs of its very different co-subsidiary."
Further, Lande said, "we think there's a valid business purpose in separating them, so they can better access capital markets in coordination with their business structure and model. And, they can better attract and retain talent through potentially appreciated equity that closely represents the value of the business."
This MMI recommendation is a follow up to a December 2006 presentation to the Brink's board, Lande said, "where we laid out different strategic alternatives we thought were attractive to pursue to improve poor stock performance relative to the performance of its peers and transactions in the space."
MMI believes the spin-off would result in "an achievable price north of $79 for the total value of the two entities." Lande said MMI compared stock prices of companies comparable to the two Brink's subsidiaries to come up with this figure and said they figured in "additional corporate expenses that each subsidiary might have to bear if they were their own corporate entity."
The Brink's company has not responded to MMI, Lande said.
Asked about MMI's report, Brink's company spokesman Ed Cunningham said, "Our strategy hasn't changed. We continue to believe the best path to create long-term value for all of our shareholders is to support the growth opportunities within our two security businesses under the Brink's brand and to explore expansion of this brand into other security-related businesses. As I've said many times, we'll continue to evaluate strategic direction and alternatives on a regular basis."
The Brink's Company stock closed at 62.91 on April 6. The 52 week-high is 66.12; the low is 49.98. The earnings per share is 11.63.