* MMI Investments sends letter seeking strategic review
* Earlier recommendations rebuffed by board
By Nadia Damouni
NEW YORK, Aug 10 One of Checkpoint Systems
Inc's CKP.N largest shareholders is seeking a sale of the
company, according to a letter the shareholder, MMI Investments
LP, sent to the company.
MMI Investments, also known as Millbrook Capital Management
Company LLC, holds a 4.9 percent stake in Checkpoint, which
makes a variety of products designed to curtail shoplifting.
The New York-based hedge fund said it tried to make its
recommendations to the company's board and its chief executive
Rob van der Merwe since June, but had been rebuffed.
"We have recommended that Checkpoint hire an investment
banker to explore strategic alternatives, which the board
summarily dismissed. We have attempted to connect Checkpoint
with those who are highly qualified and potentially interested
in buying the company, to no avail," Jerome Lande, partner of
MMI Investments wrote in the letter obtained by Reuters.
The letter, dated August 10, also mentioned MMI's recent
request to have a representative appointed to Checkpoint's
nine-member board, an option that was also rejected.
MMI Investments plans to file a schedule 13-D with the
Securities and Exchange Commission, indicating that it has
accumulated over 5 percent stake in the company.
As of Tuesday's close, Checkpoint had a market
capitalization of $576 million. The shares closed up almost 10
percent to $14.37.
Philadelphia, PA-based Checkpoint has over the last three
decades built a suite of products that primarily focus on
reducing "shrink," or merchandise lost through employee theft,
shoplifting, vendor theft and paperwork errors, for retailers
ranging from supermarkets to apparel.
MMI Investments said Checkpoint's shares have declined
every year for the last eight years and has underperformed the
S&P 500 as well as small cap indices, including the Russell
"Our analysis suggests that a transaction could yield a
stock price in the low-to-mid $20s, assuming acquisition by a
financial sponsor at 7.5 to 8.5 times the midpoint of the
company's 2011 EBITDA guidance, and potentially well above that
with a strategic acquirer," Lande said in the letter.
MMI Investments recently won its several month shareholder
battle against EMS Technologies ELMG.O. It requested that EMS
hire an independent special committee to run its sale process
and nominated a slate of nominees to the company's board of
EMS, which provides wireless connectivity solutions over
satellite and terrestrial networks, eventually sold itself in
June to Honeywell International Inc (HON.N) for $506 million in