Top Companies Stand to Benefit if Brink's Sells

A cadre of top name hedge funds stands to benefit if The Brink's Company decides to sell itself. The armored car and home security company has not said it was for sale, but Pirate Capital, the activist hedge fund firm run by Thomas Hudson, is prodding Brink's in that direction. Others with a significant piece of the action include Warren Lichtenstein's Steel Partners, Owl Creek Asset Management and Eric Mindich's Eton Park Capital Management.

Brink's is Pirate's largest portfolio position, and with a market cap of approximately $2.6 billion, it represents a sizeable target. Pirate, which owns roughly four million shares equaling an 8.7% position, believes that a sale could unlock shareholder value, according toa letter to Chairman Michael Dan. "[Brink's] shares have yet to be awarded a multiple that reflect the company's value as a pure play security company with an attractive balance sheet and strong growth prospects," the letter says. "We're interested in their views and will consider it," said Ed Cunningham, head of investor relations at Brink's. He declined to elaborate.

Pirate, citing a healthy M&A environment and private equity appetite, is confident the company could conservatively fetch $68-72 per share. Jeff Altman, managing member of Owl Creek, concurred with Pirate's valuation. He told AIN the company could be valued in the high 60sor 70s. Brink's management has done a good job, but the business is ripe for a LBO acquisition, and the company could be sold or split into two to create value, said Altman. He added that he would leave it up to the company to decide a course.

In the letter, Pirate requests a meeting with the board to discussvaluation. In a response letter, Dan said the suggestions were passed on to the board. The company's shares were trading around 54 last week as AIN went to press.

Pirate purchased the bulk of its shares around late December to mid-February at an average price of around 49, according to a filing with the Securities and Exchange Commission. Steel owns about 3.7 million shares, according to its most recent SEC filing. Owl Creek owns roughly 1.8 million shares and Eton Park has 1.2 million shares, according to the firms' most recent filings.

Officials at Pirate and Eton Park declined to comment. Calls to Steel were not returned by press time.

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