Unisys: Is a Proxy Fight Brewing?

Things are heating up in Blue Bell.

June 2 is the deadline for nominations for the 4 open board seats at Unisys (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.

Comments

[CrossProfit_:]

GS has been short UIS since the stock hit the $8.50 range (went up to $9.50 and came all the way down). Just thought this was worth a mention and needs to be checked for current position.

Saul Sterman
CrossProfit

2008 May 20 12:04 PM

[mike sanders:]

I used to work for Sperry at the time iof the merger both companies Sperry and Burroughs were worth over 5bn, Sperry had huge cash reserves and a fantastic customer base in defens and large transactional systems. The then head of Burroughs Michael Blumenthal then proceeded to destroy two perfectly good companies with the result we see today. Unisys is neither fish nor fowl and is run by a bunch of incompetents who should be jailed for what they have done to investor value in the 22 years since the merger.

2008 May 21 09:30 AM