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Shares of the Blue Bell-based company are up about 40 percent since November, when MMI Investments, a New York-based investor that has a knack for picking companies that later are sold, said it had acquired a 6 percent stake. It since has raised its stake to 8 percent. Lon Juric of Streetinsider.com, in an entry on his blog, noted MMI's "buyout touch" in a parody of the Genesis song "Invisible Touch."
MMI Investments seems to have a buyout touch - yeah. They take a stake, and you should take it to heart. MMI Investments seems to have a buyout touch - yeah. They take control before a buyer looks to tear it apart.
Five out of 7 stocks in MMI's portfolio have now been acquired, he wrote. This week its invesment in medical supply maker DJO Inc. (NYSE: DJO) paid off with a $1.3 billion buyout offer from Blackstone Group. Among the companies in MMI's portfolio that have not been bought, one is Brink's Co. (NYSE: BCO), which MMI is pushing to spin off one of its two businesses and is a rumored buyout target anyway. The other: Unisys. What's motivating MMI's interest in Unisys? It didn't return a call to PhillyInc and Unisys spokesman Jim Kerr said by email the company declined to comment on relationships with specific shareholders or on potential mergers and acquisitions.
But MMI obviously sees something in Unisys that eludes Wall Street analysts. Their median 12-month target price on Unisys is $8.50, about 50 cents below where it currently trades. The stock also isn't particularly cheap either, trading at a higher price-to-earnings multiple than peers such as Perot Systems Inc. (NYSE: PER) and Affiliated Computer Services Inc. (NYSE: ACS).
How actually attractive is Unisys? The company does about a $1 billion worth of business with the federal government, which would make it attractive to large defense contractors such as Lockheed Marin Corp. (NYSE: LMT) and Northrop Grumman Corp. (NYSE: NOC), which also have large IT services businesses.
My hunch is that any new buyer would want to retain as many Unisys employees as possible with technical backgrounds, but that's difficult to predict. Until a buyout comes, the company will continue to muddle through as it has done for years. Its next quarterly earnings report due Tuesday is expected to be dreadful. Sales have declined for three out of the past five quarters, and Thomson Financial says analysts expect the sales trend to be little changed in the second-quarter earnings report. Bloomberg estimates that net income, which has dropped for seven out of the past nine periods, will be about $15.57 million. That's the lowest profit since at least 2003.
Stay tuned.
