CHICAGO - Lakeview Investment Group & Trading Company, LLC, a shareholder of Pitney Bowes Inc . (NYSE: NYSE:PBI), has publicly recommended that the company's board initiate the sale of its Global Ecommerce (GEC) unit. Lakeview, which owns approximately 2.55% of Pitney Bowes' outstanding common shares, believes that selling the loss-making segment could nearly double the company's share price and significantly reduce its leverage ratio to about 3x EV/EBITDA.
In an open letter issued today to the board, Lakeview expressed concern over the lack of permanent leadership at Pitney Bowes, highlighting the recent high turnover in the C-suite and boardroom. The investment group underscored the importance of stable leadership to maintain focus on the company's strategy and execution.
Lakeview contends that the GEC unit has been a drain on resources, costing shareholders more than $100 million per year for several years. The group argues that a sale could lead to an increase in net income, a deleveraged balance sheet, and unlocked shareholder value. The investment firm suggests that strategic buyers might be interested in acquiring the GEC business due to its volume and package characteristics, even if it means selling the business for zero or less to account for any longer-tailed liabilities.
The investment group also noted that the total debt of the company appears to be around $2 billion, which includes approximately $1 billion of implied financing-related debt that should be excluded from the net debt calculation. They believe that without the negative EBITDA from GEC, the company's overall indebtedness would decrease, potentially leading to improved creditworthiness and more favorable financing terms.
Lakeview's analysis, based on SEC filings and company management data, suggests that even without significant reductions in corporate overhead, the shares of Pitney Bowes could re-rate materially post-GEC disposition. The investment group maintains that shareholders would benefit from a timely divestiture of the GEC unit and urges the board to consider the value creation opportunity.
InvestingPro Insights
As Pitney Bowes Inc. (NYSE: PBI) faces shareholder pressure to sell its Global Ecommerce (GEC) unit, a closer look at the company's financial health through InvestingPro data reveals some key insights. The market capitalization of Pitney Bowes stands at approximately $739.99 million, indicating the size and scale of the business in the current market. Despite concerns over its debt, the company has demonstrated a commitment to returning value to shareholders, maintaining a dividend yield of 4.82% as of the latest data, with a remarkable track record of dividend payments for 54 consecutive years.
InvestingPro Tips highlight the company's significant debt burden, which aligns with Lakeview's concerns about the company's financial leverage. However, the tips also suggest a high shareholder yield and a potential increase in net income this year, which could support the argument for unlocking shareholder value through strategic decisions such as the sale of the GEC unit. Analysts predict Pitney Bowes will be profitable this year, and the stock has experienced a large price uptick over the last six months, with a 31.84% return, indicating some market optimism.
For investors considering Pitney Bowes' prospects, the InvestingPro platform offers additional insights, with a total of 8 InvestingPro Tips available for PBI. These tips can provide a deeper understanding of the company's performance and potential, which can be especially valuable in light of the current shareholder activism. Investors interested in accessing these tips and more detailed analytics can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
As the next earnings date approaches on May 2, 2024, stakeholders will be keen to monitor how the company's strategies, including the potential sale of the GEC unit, will impact its financial performance and position in the market.
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