The Brink’s Company
(NYSE: BCO) shares rose 1.4 percent today after the security company
announced that it would spin off its home security unit in order to
appease a growing number of dissident shareholders. The news comes
after enormous pressure from activist shareholders Pirate Capital and
MMI Investments, both of whom planned proxy contests to overtake the
board if changes were not implemented. The company has finally agreed
with the activists after completing a review of its strategic options
with the help of the Monitor Group and Morgan Stanley. The Brink’s Home
Security unit is one of the largest and most successful residential
alarm companies in North America and the spin-off should unlock
substantial value for shareholders who have been struggling to realize
value in their investment.
“Today’s announcement, which is the culmination of a comprehensive
and thorough review of the strategic options available to the company,
further demonstrates the board’s commitment to enhancing shareholder
value,” said Michael T. Dan, chairman, president and chief executive
officer of The Brink’s Company. “Both BHS and Brink’s, Inc. are market
leaders that outperform their respective peers on almost every
operating metric. As separate publicly traded entities, each company
should benefit from enhanced management focus, more efficient
capitalization and increased financial transparency. In addition,
shareholders will have a more targeted investment opportunity, and
incentives for management and employees will be more closely aligned
with company performance and shareholder interests. Given these
advantages, we are confident that this transaction will enable BHS and
Brink’s, Inc. to more quickly realize the valuations they deserve. I
commend the employees of both BHS and Brink’s, Inc. for their hard work
and dedication in building these two great businesses. I am confident
that both companies will continue to create value for their
shareholders, employees and customers.”
The spin-off will convert Brink’s into two separate publicly traded companies:
- The Brink’s Company includes the businesses of Brink’s Inc., the
world’s premier provider of secure transportation and cash management
services. The company has approximately 54,000 employees at operations
in more than 50 countries, had 2007 revenues of approximately $2.7
billion and operating profit of $223.3 million.
- BHS, which has approximately 3,600 employees, is one of the largest
and most successful residential alarm companies in North America. In
2007, BHS had revenues of approximately $484 million and operating
profits totaling $114.2 million. BHS operates in all 50 states, the
D.C. and several markets in two western providences in Canada. BHS’s
ability to provide an outstanding customer service experience as
awarded by J.D. Power and Associates, has created a loyal customer base
that includes approximately 1.2 million systems under monitoring
contracts. Through its dedication to high quality customer service, BHS
maintains one of the highest subscriber retention rates among major
residential alarm companies.
Brink’s also reached an agreement with activist hedge fund MMI
Investments whereby one of their nominees will be supported as a
director at the 2008 annual meeting while another director of theirs
will be nominated at BHS following the spin-off. In return, MMI has
agreed to withdraw its request to nominate any directors at the next
annual meeting. Combined, these events represent yet another victory
under the belt of activists and should result in substantial value
creation for shareholders that many estimate as high as 40% to 50%
premium. These factors make BCO a stock that is definitely worth
following over the next few months!
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