Teaching Note | HBS Case Collection | November 2012

Brink's Company: Activists Push for a Spin-off (TN)

by Suraj Srinivasan

Abstract

The case this Teaching Note addresses studies the decision of the security services company Brink's Corporation to spin off its home security division from the rest of the company. The decision followed intense pressure on the company by three activist hedge funds that felt that Brink's was chronically undervalued and the individual businesses were worth more than the combined company. The company resisted the decision for more than a year before agreeing to the break-up. The case follows the argument made by the company and each investor. It also describes the actions by the company to convince its shareholders of the merits of keeping the company together as well as the actions activist investors took to get the attention of management, the board, and other investors. The businesses, secure transportation and home security monitoring, are described from both a business strategy and a financial perspective so that the potential value of different value enhancing options can be analyzed.

Keywords: Activist Investors; Spin-off; leveraged recapitalization; debt; valuation; hedge funds; conglomerates; Valuation; Restructuring; Accounting; Business Strategy; Investment Activism; Service Industry;

Citation:

Srinivasan, Suraj. "Brink's Company: Activists Push for a Spin-off (TN)." Harvard Business School Teaching Note 113-053, November 2012.