MMI Investments Again Urges Brink's (BCO) To Pursue a Spin-Off

In an amended 13D filing on Brink's Company (NYSE: BCO) this morning, 8.3% holder MMI Investments disclosed a new letter to the Board of Directors presenting its views concerning the potential desirability of a spin-off of one of its two business segments.

MMI highlighted news last week that the company's competitor in security monitoring, Tyco, completed its long awaited spin-offs and, commenting on the high level of strategic activity in its industries said, "BCO has taken no action despite repeated demands from stockholders." MMI said, because of the company's non-action, "we fear that the public markets are passing BCO by."

Commenting on the potential value of Brink's in the event of a split-up, MMI said, "the aggregate value of achieving the business purposes of a tax-free split-up would be worth more than $79 per BCO share (an increase of 26% or more from today’s closing stock price), but also note that this updated analysis suggests our expectations may be unduly conservative."

NOTE: Recently we published an article highlighting MMI's 'Buyout Touch"

NOTE 2: Brink's is also an activist target of Pirate Capital, which was awarded a seat on the company's board.

A Copy of the Letter:

Dear Members of the Board,

Last week BCO’s largest competitor in security monitoring, Tyco, completed its long awaited spin-offs; in turn transforming itself into a virtual pureplay in security monitoring (with nearly 60% of its EBITDA derived from ADT and no more than 13% in any other business). The new Tyco currently trades at 10.2x calendar 2007 EBITDA (versus BCO at 6.6x). The Tyco spin follows the successful example of BCO’s largest European competitor, Securitas, which spun-off its own security monitoring business, Securitas Direct, late last year. Securitas Direct currently trades at 9.7x 2007 EBITDA. Since the Securitas Direct spin-off there have also been two major strategic acquisitions in the security monitoring space (HSM Electronic and IASG) and one in cash-in-transit (ATI), all at robust valuations.

In contrast to this high level of strategic activity in its industries, BCO has taken no action despite repeated demands from stockholders. More than six months have passed since MMI presented the Board with its review of BCO’s strategic alternatives to enhance stockholder value, and more than three months have passed since MMI refined that review to recommend a tax-free split-up of BCO as the best option. Our concerns now extend beyond maximizing BCO’s value – we fear that the public markets are passing BCO by, to the potential detriment of all its stakeholders.

For the Board’s benefit, we have enclosed herein updated analysis of a split-up of BCO’s two subsidiaries, which includes an expanded comparable public company universe at more robust multiples than in our March 30, 2007 presentation. We continue to believe that the aggregate value of achieving the business purposes of a tax-free split-up would be worth more than $79 per BCO share (an increase of 26% or more from today’s closing stock price), but also note that this updated analysis suggests our expectations may be unduly conservative. As always, we are at your disposal to discuss the enclosed analysis.

Sincerely,
Clay Lifflander