- The Washington Times - Monday, February 5, 2007

Brink’s Co., the Richmond security firm, is under pressure from stockholders to sell the company despite high fourth-quarter earnings.

Even with robust quarterly returns, Brinks has been confronted by investors who think the stock is undervalued and should sell its assets in 2007.

The company saw net income grow 165 percent to $126.6 million ($2.71 per diluted share) for the three months ended Dec. 31, compared with $47.7 million (83 cents) a year ago.

Brinks got a big boost from the sale of its freight transportation subsidiary, BAX Global Inc., in the first quarter of 2006. The asset was sold for $1.1 billion to Deutsche Bahn AG, a transportation and logistics company in Germany.

“It was the last of our non-core businesses to be sold,” said Ed Cunningham, a spokesman for Brinks. “With the billion dollar sale we bought 21 percent of the stock back, reduced our debt and put $225 million in a legacy liabilities fund.”

Even with impressive earnings for the quarter, two of Brinks largest investors, Pirate Capital LLC, a hedge fund in Norwalk, Conn., and MMI Investments LP, a New York-based hedge fund, are pressuring the company to consider strategic alternatives to increase shareholder value.

Pirate Capital and MMI Investments own a 8.5 percent and a 8.3 percent stake in Brinks, respectively.

One option investors have suggested is the sale or split of Brinks two subsidiaries, Brink’s Inc., and Brink’s Home Security, Inc.

Brink’s Inc. is an armored car and ATM security company and Brink’s Home Security Inc., monitors residential and commercial properties in the United States.

“I agree that ultimately two businesses need to be split up,” said Brian Butler, an analyst for the Friedman, Billings, Ramsey Group Inc., an Alexandria-based investment banking firm.

“The two businesses don’t overlap because they are in such different markets,” said Mr. Butler.

The real question is whether or not the management team is willing, Mr. Butler said.

Mr. Cunningham said that the company is considering its investors’ proposals, but Brinks strategy is to “use our capital to grow our two security businesses.”

In December, MMI Investments advocated change, filing a 13D proposal with the Securities and Exchange Commission that said: “We … remain extremely frustrated with [Brinks] continued undervaluation.”

Pirate Capital filed a proposal in November 2006 to add two of its members to the board to replace two of Brinks board members who are intelligible for re-election.

Some analysts question whether the proposal could come to a proxy vote in which investors would be asked to vote on the candidates, potentially pushing the company into a drawn-out legal dispute with investors.

“This may become a game of chicken, said Mr. Butler. “Will Pirate and Brinks go down the route of a proxy battle?”

Mr. Cunningham said the board has not set its annual meeting date, but the company is reviewing the proposals with its board and management team.

A spokesman from Pirate Capital declined to comment.

Shares of Brinks closed down 30 cents at $63.22 on the New York Stock Exchange yesterday.

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