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A Breakup At Brink's?

Will security king Brink's (BCO) finally yield to demands to split the company? Activist shareholders have upped pressure to spin off to shareholders the home security unit, so it can trade independently of the armored cars. Last September big stakeholders, including Pirate Capital, with 8.7%, and MMI Investments, with 8.3%, pushed for a sale or breakup. That resulted in Brink's naming Thomas Hudson, who heads Pirate Capital, to its board. On July 10, MMI followed with a letter to the board, filed with the Securities & Exchange Commission, urging a split. "We are very frustrated by management's lack of action," says Clay Lifflander, president of MMI, who notes that other biggies in security--Tyco International (TYC) and Sweden's Securitas--have spun off their security units. Lifflander figures with a tax-free spin-off, the combined value of the units would jump to 88, up from Brink's current 63.11. In a voting showdown, says Lifflander, the activists would win: Their stake totals 32%, which includes Steel Partners' 8% and Fidelity Investments' 10%. Brink's, which has hired an investment banker for strategic advice, says it is weighing options. Anthony Fiore of Standard & Poor's (MHP) rates Brink's a buy, with a 12-month target of 83. Brink's was last featured in this column on Sept. 4, 2006, when it was at 55.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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