Shamrock Holdings Urges Brink's Board To Explore Sale of the Company
Shamrock Holdings Inc. (“Shamrock”), shareholder in The Brink's Company, announced today that President Stanley P. Gold sent a letter to the Board of Directors urging the immediate consideration of strategic alternatives, including the sale of the company, in the wake of a five-year stock price decline of more than 60%, "years of empty promises and failed initiatives" and continuing deficiencies in corporate governance.
Below is the text of Mr. Gold's letter to the Brink's board:
November 2, 2012
Board of Directors
The Brink's Company
P.O. Box 18100
1801 Bayberry Court
Richmond, VA 23226-8100
Attention: Murray D. Martin, Lead Director
Ladies and Gentleman:
We are shareholders of The Brink's Company, and we are writing to urge the Board of Directors to address meaningfully Brink's continuing underperformance by launching an immediate exploration of strategic alternatives, including a sale of the company.
The Brink's shareholders have suffered through years of empty promises and failed initiatives. In the last five years, Brink's stock price has declined by over 60%. Brink's stock price has also consistently lagged behind the stock price of its key competitors. In the last year alone, Brink's was on the bottom with an approximate 11% drop in share price. In contrast, G4S plc, Loomis AB and Prosegur, Compania de Seguridad, S.A. (which are competitors listed in the Company's 10-K) all increased their share value by at least 5%.
Unfortunately, we do not believe there is a realistic chance for improvement by continuing on the existing path with current management. Over the past nine months, the situation has only worsened under the tenure of new management. The Company's earnings per share during this period plummeted from $.66 per share to $.28 per share, a drop of over 57%. The more than 7% drop in Brink's stock price since the Company's earnings announcement is simply more evidence of the shareholders' lack of faith that the Company can turn itself around.
Brink's also has failed to address significant concerns regarding its corporate governance. At the Company's 2012 annual meeting, almost 45% of the shareholders followed ISS' recommendation and voted against the proposal on executive officer compensation. Given this shareholder outcry, we would have thought that the Company would have been proactive in responding to the shareholders' clarion call for change. However, more than seven months after Michael Dan's departure was announced, the Board elevated board member Thomas Schievelbein from an interim CEO and Chairman position to the permanent CEO, President and Chairman of the Board. Taken at face value, this is an inexplicable result that calls into question the effectiveness of the Board's oversight over, and apparent lack of, succession planning and execution, all in contravention of the Company's own corporate governance policies. Moreover, by declining to separate the CEO and Chairman role, the Board continued to demonstrate its arrogance in dismissing shareholder concerns regarding the Board's poor corporate governance.
We do not think that current management has the skills to revive this once dominant brand and company. Accordingly, we believe that the Company's best alternative to improve shareholder value is to launch a thorough review of all strategic alternatives, including a sale of the entire company. In our view, Brink's would be an attractive acquisition target. Just last month, Garda World Security announced it will be acquired by a private equity company at a 30% premium. Applying the transaction metrics in the Garda transaction, Brink's would be valued at approximately $40 per share, or a 57% premium to the current stock price. Moreover, Brink's may be appealing to strategic acquirers who are looking to expand in the U.S. or buttress their operations in Europe or Latin America. We do not believe this management continuing to operate under the supervision of this Board could come close to approaching the shareholder value that can be obtained in a sale. Even if management could devise a recovery plan, the execution risk associated with its implementation would make this track far less desirable for shareholders than a sale. Accordingly, the Board should promptly form a special committee comprised of independent directors to explore all strategic alternatives for the Company before shareholder value is further eroded.
We would like to participate in the effort to create value for all Brink's shareholders by engaging the independent directors of the Board in a constructive discussion about these areas of critical concern, which we believe that other shareholders share. Given the drop in Brink's share price and persistent underperformance, we hope the Board does not continue to turn a tin ear to its shareholders and agrees to meet with us promptly. Please contact me as soon as possible so we can set up a time to meet.
|Very truly yours,|
|Stanley P. Gold|
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Shamrock Holdings Inc.
Clifford A. Miller, 818-973-4297