IHaveAPension
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UPDATE 3-Brink's shares rise on BAX unit sale report
Thu Jun 16, 2005 01:59 PM ET
(Adds MMI reaction, details, updates share price)
NEW YORK, June 16 (Reuters) - Shares of Brink's Co. (BCO.N: Quote, Profile, Research) rose as much as 16.9 percent on Thursday after a newspaper report said the company, known for its armored car and home security business, has put its transportation and logistics unit up for sale.
Brink's may sell its BAX Global unit that moves heavy cargo through a network of planes trucks and ships, The Wall Street Journal reported, citing people familiar with the matter.
A Brink's spokesman would not comment on the report.
Brink's largest shareholder, MMI Investments LP, had suggested in April that a sale of the unit could improve Brink's share price and help the company pay off its legacy costs.
The New York-based hedge fund estimated in an April U.S. Securities and Exchange Commission filing that the BAX unit could fetch proceeds of up to $500 million, roughly 10 times its price-to-cash flow.
With more than 11,000 employees, the unit had sales last year of $2.4 billion. But it has struggled to turn a profit, posting a net loss over the last five years of $50 million, MMI said.
"We expected that sooner or later they would acknowledge that this is the correct course of action and there's no greater indicator than today's reaction in the stock price that selling BAX is the right course of action to follow," said Jerome Lande, an assistant portfolio manager at MMI.
Strong balance sheets of global transport companies that might acquire BAX, and recent strength in the cargo market, make it a particularly ripe time to sell the company, Lande added.
The move would also give investors a clearer picture of Brink's, an analyst said on Thursday.
"Even if the purchase price was less than $500 million, that would still be a positive for the stock," said James Clement an analyst at Sidoti & Co.
BAX Global is a corporate descendant of the Burlington Northern railroad, which created an air-freight division purchased by Brink's in 1982. The unit was renamed BAX Global in 1997, the newspaper said.
After some profit-taking in afternoon trading, Brink's shares were up $4.46 or 13.9 percent at $36.41 on the New York Stock Exchange.
var year = new Date() document.write('© Reuters ' + year.getFullYear() + ". All Rights Reserved." ); © Reuters 2005. All Rights Reserved.
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Industry speculation is that UPS might be a player for it to consolidate it's hold on the heavy air freight market. If UPS buys BAX what happens to ATI? What is the relationship of ATI to BAX? Could be another Challenge or Menlo situation of this happens. Or since ATI is a division of Brinks, UPS could just buy BAX and leave ATI to wither on the vine as the TOL would be closed and the operations moved to SDF.
Thu Jun 16, 2005 01:59 PM ET
(Adds MMI reaction, details, updates share price)
NEW YORK, June 16 (Reuters) - Shares of Brink's Co. (BCO.N: Quote, Profile, Research) rose as much as 16.9 percent on Thursday after a newspaper report said the company, known for its armored car and home security business, has put its transportation and logistics unit up for sale.
Brink's may sell its BAX Global unit that moves heavy cargo through a network of planes trucks and ships, The Wall Street Journal reported, citing people familiar with the matter.
A Brink's spokesman would not comment on the report.
Brink's largest shareholder, MMI Investments LP, had suggested in April that a sale of the unit could improve Brink's share price and help the company pay off its legacy costs.
The New York-based hedge fund estimated in an April U.S. Securities and Exchange Commission filing that the BAX unit could fetch proceeds of up to $500 million, roughly 10 times its price-to-cash flow.
With more than 11,000 employees, the unit had sales last year of $2.4 billion. But it has struggled to turn a profit, posting a net loss over the last five years of $50 million, MMI said.
"We expected that sooner or later they would acknowledge that this is the correct course of action and there's no greater indicator than today's reaction in the stock price that selling BAX is the right course of action to follow," said Jerome Lande, an assistant portfolio manager at MMI.
Strong balance sheets of global transport companies that might acquire BAX, and recent strength in the cargo market, make it a particularly ripe time to sell the company, Lande added.
The move would also give investors a clearer picture of Brink's, an analyst said on Thursday.
"Even if the purchase price was less than $500 million, that would still be a positive for the stock," said James Clement an analyst at Sidoti & Co.
BAX Global is a corporate descendant of the Burlington Northern railroad, which created an air-freight division purchased by Brink's in 1982. The unit was renamed BAX Global in 1997, the newspaper said.
After some profit-taking in afternoon trading, Brink's shares were up $4.46 or 13.9 percent at $36.41 on the New York Stock Exchange.
var year = new Date() document.write('© Reuters ' + year.getFullYear() + ". All Rights Reserved." ); © Reuters 2005. All Rights Reserved.
----------------------------------------------------------------------------
Industry speculation is that UPS might be a player for it to consolidate it's hold on the heavy air freight market. If UPS buys BAX what happens to ATI? What is the relationship of ATI to BAX? Could be another Challenge or Menlo situation of this happens. Or since ATI is a division of Brinks, UPS could just buy BAX and leave ATI to wither on the vine as the TOL would be closed and the operations moved to SDF.
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