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 Companies
Corrections Corp. of America (CXW)
The Geo Group, Inc. (GEO)
Avalon Correctional Services, Inc. (CITY)