Cornell Companies Inc. (NYSE:CRN) shares moved up $0.31, or 1.61%, to $19.61 in today's afternoon trading session after Wynnefield Partners disclosed a 17.5% stake in the company Friday afternoon. This jump comes after Cornell agreed to be acquired by Veritas Capital for $18.25 per share in cash. The optimism was spurred when fund said that they "continue to believe that the shareholders would best be served if the company were to remain an independent entity and participate in the
growth opportunities that exist in the private corrections industry". The fund also noted that Patrick Swindle of Avondale Partners stated in January that the company "appears
to have meaningfully improved its position with what appears the
addition of 500+ inmates based on our analysis ... these
extra inmates could add $10.0 million in incremental revenue and $2.0
million to $2.5 million in incremental EBITDA at full capacity." Investors are betting the Wynnefield will be successful in blocking the company's merger with its 17.5% stake - a move which could result in a higher bid by Veritas. This makes CRN a stock
worth watching closely over the next few months.
Cornell Companies Inc.'s principal activity is to provide correctional, treatment and
educational services outsourced by federal, state and local government
agencies. The Group provides a diversified portfolio of services for
adults and juveniles through three operating divisions: adult secure
institutional services, residential and community-based juvenile
justice, educational and treatment services and adult community-based
corrections and treatment services. The services of the Group include
incarceration and detention, transition from incarceration, drug and
alcohol treatment programs, behavioral rehabilitation and treatment and
3-12 education. The customers of the Group are Bureau of Prisons, U.S.
Marshals Service, Department of Homeland Security, Bureau of
Immigration and Customs Enforcement, county sheriffs, and city. As of
14-Feb-2005, the Group has 67 facilities in 16 states and the District
of Columbia.
Related CompaniesCorrections Corp. of America (CXW)The Geo Group, Inc. (GEO)Avalon Correctional Services, Inc. (CITY)