My understanding is is that PZN will absorb CCA, with CCA being a much larger company. CCA should continue business as usual, growing at a substantial rate while eliminating income taxes (I think). I own another REIT, and comparing this new REIT with the other one I own, PZN seems to be substantially undervalued. And right now, nobody is touching REIT's in general, not even with a ten foot pole. I don't usually make such bold assertions, but I wouldn't be surprised to see this PZN easily double after the dust settles, and people understand the transaction. I would hold on to this stock for at least a year. By the way, I bought in yesterday.
In addition to general dislike of REITs, this one has management, that amply demonstrated, that they are willing to put their own interests ahead of shareholders. Go to CCA thread and read posts, related to the merger. Perhaps, then, you will UNDERSTAND this transaction BETTER!
cca/pzn seem to carry self interest beyond the conflicts inherent in reits because of the oper co problem. item in point:chas thomas, a criminology prof at u fla (thus a state employee) received a $3.6mm fee (more than he could earn in career at ufl) for "consulting" re merger. this is outrageous! these cos were one only a short while ago and hardly need some college professor to put them back together! this guy in no investment banker. i am afraid doc krantz treats the shareholders like waiters at publicly traded country clubs. see cca posting 3138.
if you annualize cca pre tx cf/sh for 3q, it looks like 1.44/sh vs 1.68 pro forma pzn payout (1.92x.875) does anyone know how pzn payout can be maintained? note this postulates unrealistic 100% distribution.
I did read the news going back a ways on CCA, and recognized the screwy deal regarding the PZN purchase. I bought this stock on impulse, based on the potential of a CCA standalone entity with all of its potential. The press release stated something like that OPCO's ownership would be subject to dilution only upon approval of the parent company's board. I then realized that its possible that the entire board of PZN might have ownership in OPCO, and would be looking out for their own interests, and not ours. Another odd aspect about the transaction was that OPCO, I believe without going back into research, would pay PZN only a certain portion of its revenues. This tells me that any efficiencies gained at the OPCO level due to economies of scale, etc., in the form of higher margins would not accrue to PZN. The fact that they increased the percentage given to PZN due to a settlement of a lawsuit tells me that the original agreement could not be justified, and was a ripoff for the minority shareholders of PZN. I was confused about this stock, and still am confused, so any analysis of this stock should be done by the potential investor. The bottom line is that this stock wasn't worth the trouble, and I sold for about a 1% loss after owning it for only a day or two. Thanks for your post, and who knows, this stock may go up significantly after year-end, but I have learned not to invest in something that is too hard to understand, no matter what the prospects. IMHO.