Mergers & Acquisitions and Financial Results and Brightpoint and Public Companies and Manufacturing & Technology and Technology

Brightpoint's Danish deal not so sweet two years later

July 13, 2009

The cross-continent mega deal that made Brightpoint Inc. the world’s biggest wireless phone distributor has lost much of its sheen two years after being struck.

Brightpoint Inc. in August 2007 purchased Denmark-based Dangaard Telecom for $385 million in stock and the assumption of $350 million in Dangaard debt.

Back then, Brightpoint Chairman Robert Laikin heralded the deal, saying, “You don’t get a lot of opportunities in business to grow by combining with a great international company. One of the most exciting things is getting senior leadership and management from Dangaard. That takes pressure off me and senior Brightpoint executives that had been strained too thin.”

But last month, the last of the three senior Dangaard executives who joined Brightpoint after the deal quietly stepped down, following continued disappointing performance for the Europe/Middle East/Africa region he oversaw.

The executive, Michael Koehn Milland, moved to Indianapolis following the purchase, initially serving as co-chief operating officer and president of the international division. Last year, he became president of Europe/Middle East/Africa after its chief, Dangaard alum Steen Pederson, resigned. The third Dangaard executive, Hans Peter Alnor, chief financial officer for the European division, stepped down in late 2007.

Laikin declined to discuss the circumstances behind the departures, beyond citing boilerplate press releases. In a Securities and Exchange Commission filing, Brightpoint said Milland ceased to be an officer of the company “by action of the board of directors.” Milland declined to comment.

One thing is clear: Laikin these days seems less ebullient about the deal. Asked whether Dangaard was a good acquisition for Brightpoint, he said, “I would say that three to five years from now, I will be able to answer that question.”

To be sure, Milland was confronting a far-from-ideal business climate. Of Brightpoint’s three regions, Europe has taken the hardest hit in the global recession, at least as measured by information-technology spending.

Laikin isn’t cutting any region slack, however. “Every region of the world was dealing with a bad global economy that was unprecedented,” he said.

The company has been trying to transplant its successful U.S. strategy, which focuses on providing higher-margin logistics services like phone programming and activation, to Europe, where Dangaard operated as more of a nuts-and-bolts distributor. At the same time, it’s been slashing expenses around the world to reflect falling phone demand.

First-quarter results were bruising, with worldwide revenue tumbling 40 percent, to $709 million. All-important logistics revenue fell 29 percent in Milland’s region—the biggest drop of the three.

Brightpoint’s stock has held up relatively well, considering. The company’s shares now fetch $5.75. That’s up 32 percent for the year but down 56 percent since the day the Dangaard deal closed.

An SEC filing shows Brightpoint is easing Milland out the door. On June 30, he signed a “separation agreement and consulting agreement” under which he will receive his base salary of $530,000 for three years. The deal includes a provision preventing him from competing with his former employer.

Peterson buys Lilly shares

Bart Peterson recently told IBJ, “When you grow up in Indianapolis, Lilly is really in your blood or in your DNA.”

The pharmaceutical company isn’t necessarily in your stock portfolio, however. A new SEC filing shows that Peterson, Eli Lilly and Co.’s senior vice president of communications and community affairs, didn’t own a single share of the stock before joining the company last month.

The former Indianapolis mayor finally jumped in July 1. He purchased 5,000 shares for $34.96 a piece, for a total of $174,800.

Circle Centre slides

Sales per square foot for Circle Centre’s non-anchor stores tumbled 8.1 percent in 2008, slipping from $407 to $374, according to a report that locally based mall manager Simon Property Group Inc. recently submitted to the city.

The slide was more severe than the overall decline of 4.3 percent among Simon’s 160 regional malls. They saw sales per square foot slip from $491 to $470.

The report says 2007 sales received a boost from “record-setting mall traffic and strong first-quarter sales driven by the excitement of the Indianapolis Colts’ first Super Bowl championship.

“Furthermore, the challenging economic conditions that permeated all industries in the latter half of 2008 had a negative effect on consumer confidence and brought about a weak holiday shopping season for a number of national retailers.”

Circle Centre’s sales long have lagged those of upscale malls like the Fashion Mall at Keystone. But the 2008 decline widens the gulf. In 2007, Circle Centre’s sales per square foot were 17 percent below Simon’s entire portfolio. They’re now 20 percent below.

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