The Brinks Company (NYSE:BCO) may see some changes made to its board and company direction in the near future after Pirate Capital LLC sent yet another letter, in a Schedule 13D/A filing, to the company expressing its interest in obtaining two seats on the company's board. The activist hedge fund also reiterated the their requests that the company retain an investment bank to examine strategic alternatives, and questioned the company's stated plans to pursue acquisitions.

Pirate Capital also threatened a proxy contest if the board did not act on its requests immediately, saying in their letter that "unless the board acts with a renewed sense of duty, we will not be able to avoid an expensive and lengthy proxy contest." The 8.5% holder then validated their threat by filing a Schedule 14A proxy statement, nominating two of its own candidates to the company's board of directors in the next annual shareholders meeting. Currently, Brink's board consists of eleven members with four of them up for re-election at the next annual meeting. Pirate Capital is targeting two of these four seats, which are held by directors who will not be seeking re-election at the next annual meeting.

Finally, Pirate Capital commended MMI Investments detailed analysis of possible strategic alternatives for the company, which included an LBO, sale to a strategic suitor, tax-free split-up of the company, leveraged recapitalization, or another significant stock repurchase. MMI also noted that their analysis put the intrinsic value of Brinks at around $70 per share or higher. Combined, these two dissident shareholders account for nearly 20% of the company's outstanding shares - giving them significant leverage in any proxy contest. Consequently, Brinks will probably be forced to give up two board seats to Pirate, which would likely result in at least some measures to increase shareholder value.

Pirate Capital's letter says it best: "We do not understand how the Board remains so determined to pursue an acquisition when two of Brink's largest shareholders have independently questioned that course and requested the retention of an investment bank to explore alternatives. The Board's concern should be the interests of its shareholders ... We would welcome an invitation by the Board to meet our two nominees, and we hope that a proxy contest can be avoided so that the Board can remain focused on what is most important; finally putting to rest the enduring undervaluation of BCO shares." Clearly there is a disconnect here between management interests and shareholder interests. And with a combined ~20% stake in the company, these two activist hedge funds have a good chance at enforcing changes to unlock shareholder value and help BCO back up into the $70 range. This makes Brinks a stock worth watching over the next few months.

Read Pirate Capital's Letter to The Brinks Company

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