Pirate again says sell, but Brink's looks at buying

NORWALK, Conn.--Despite recent travails of its own, Pirate Capital, an activist hedge fund and major stockholder of The Brink's Company, has not given up the ship on getting Brink's to put itself up for sale. However, analysts believe that Brink's will be less likely to heed Pirate's advice and more likely to pursue acquisitions. Isa Bolotin, investor relations head for Pirate Capital, did not return a Nov. 29 call requesting comment. Pirate, in early October, lost five of its investment employees and also dealt with SEC scrutiny of its stock sale reporting. Following up on his letter of last August when he advised the Brink's board of directors to seek buyers for the company, Thomas Hudson, managing partner of Pirate Capital, on Nov. 21 penned another letter reiterating this advice, this time suggesting that he be appointed to the company's board of directors. However, Yvonne Varano, senior vice president for equity research at Jefferies & Company in New York, said that while "for the right price assets would be sold ... there are other ways to provide shareholder value," and that seeking strategic acquisitions is the more likely strategy for Brink's. During its recent quarterly earnings conference call, Bob Ritter, vice president and chief financial officer, and Michael Dan, chief executive officer of The Brink's company, discussed the company's plans for 2007. The board of directors has "sought advice from advisors where necessary" and "received viewpoints from investors," Dan said. Noting the successes of 2006, Dan said that the company plans to invest in its two existing businesses and is aggressively "exploring acquisitions of other security-related businesses that could benefit from the Brink's brand." What type of company would Brink's seek to acquire? Ed Cunningham, spokesman for Brink's, said that during the conference call company executives mentioned that, "Although Brink's will continue to grow organically, it is interested in potential acquisitions in the commercial market." Brink's Home Security launched a commercial arm last winter. Commercial business now accounts for about five percent of Brink's security business. As far as Hudson's seat on the board, Varano noted that Brink's added two new members to its board in 2005 and would be unlikely to take any action on board member changes before the May 2007 annual meeting. Asked about a Brink's response to the Pirate letter, Ed Cunningham, Brink's spokesman, said "we don't have any comment on that right now."