GEO Group To Buy Cornell

Reuters
* Offer at 35 pct premium to Cornell's Friday close * Geo, Cornell reaffirm Q1 profit views
April 19 (Reuters) - Prison operator Geo Group Inc (GEO.N) agreed to buy rival Cornell Cos (CRN.N) for about $374.4 million in cash and stock, as it expands to meet an increasing demand for correctional and detention facilities.
The deal values Cornell at $24.96 a share, a 35 percent premium to the stock's Friday close. Cornell had about 15 million shares outstanding as of Feb. 19.
Under the terms of the agreement, Cornell shareholders can choose to receive 1.3 shares of Geo's common stock for each share held.
They also have the option to choose cash equivalent to 1.3 Geo shares or 1 Geo share plus $6, whichever is higher.
Geo will also assume about $300 million of Cornell debt, the companies said.
The acquisition creates a company with revenue of about $1.5 billion, Geo's Chief Executive George Zoley said in a statement.
The combined company will manage or own 97 correctional and detention facilities with a total capacity of about 76,000 beds and 32 behavioral health facilities.
Geo expects the deal, slated to close in the third quarter, to add to its 2011 pro forma earnings.
Both companies reaffirmed their earnings outlook for the first quarter. (Reporting by Viraj Nair in Bangalore;)