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Corrections Corporation of America Message Board

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  • superincumbent superincumbent Dec 23, 1998 5:18 PM Flag

    Acquisition related to price drop?

    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.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • 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!

      • 3 Replies to Cleopatra556
      • 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.

 
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