Unisys: Is a Proxy Fight Brewing?

| About: Unisys Corporation (UIS)

Things are heating up in Blue Bell.

June 2 is the deadline for nominations for the 4 open board seats at Unisys (NYSE:UIS), the troubled computer hardware and consulting company created in 1986 from the merger of Burroughs and Sperry. Activist investor Millbrook Capital, which has a 9.9% stake in the company, has been leaning on the Unisys board to take action to enhance shareholder value; the company responded earlier this year by postponing its annual meeting and hiring Bear Stearns as a financial adviser.Millbrook previously proposed that the company sell or spin off its government services business.

Clearly, something has to happen soon; Millbrook could nominate a dissident slate if the company does not take action before the upcoming deadline. In a research note this morning, UBS analyst Jason Kupferberg thinks it is still possible a proxy fight can be avoided, but contends “bolder action” is required beyond the cost-cutting measures of recent years, including strategic actions and management changes.

Kupferberg, who has a Buy rating on the stock, says a sum-of-the-parts analysis finds the company worth $7 to $7.50 a share, “indicating that the secular decline of the hardware business and very spotty execution have prevented the stock from achieving its potential.”

Stay tuned to this one; it could get interesting in the next few weeks.