U.S. Markets closed

Pitney's Unit Sale to Fund Bond Buyback

Zacks Equity Research

Pitney Bowes Inc. (PBI) recently issued a notice to repurchase its bonds due Aug 2014 valued at about $300 million. The company plans to fund the repurchase from the proceeds generated by the divestiture of its Management Services division to Apollo Global Management, LLC (APO). Pitney Bowes’s stock price rose 1.6% yesterday.

On Oct 1, Pitney Bowes completed the sale of its Management Services division to funds affiliated with Apollo Global Management. The division was sold at $400 million in cash. Pitney Bowes had announced its intention to divest the business on Jul 30, 2013. In fiscal 2012, Management Services division generated revenues of $921 million.  

Pitney Bowes is a mailing equipment and software company, providing technology solutions for small, mid-size and large firms. Apollo is an alternative investment manager, having exposure in private equity, credit and real estate funds.   

This divestiture is a win-win situation for both the companies. Through the sale of this division, Pitney Bowes intends to become a more focused company and generate operating efficiencies in the market, where the company has a core competence. On the other hand, Apollo Global can benefit from the division’s technology-enabled document and communications solutions that improve work processes, thereby enhancing customer interactions and drive growth.     

Post acquisition, Pitney Bowes Management Services will be operating as a standalone company under the new name Novitex Enterprise Solutions, allotted by Apollo.

Pitney Bowes currently has a Zacks Rank #3 (Hold). Other stocks in the industry which are worth considering at the moment are Blackbaud Inc. (BLKB) and Dealertrack Technologies, Inc. (TRAK). Both the stocks carry a Zacks Rank #1 (Strong Buy).   

Read the Full Research Report on PBIRead the Full Research Report on APORead the Full Research Report on TRAKRead the Full Research Report on BLKBZacks Investment Research