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Corrections Corporation of America Message Board

  • brucedgaither brucedgaither Feb 28, 2000 10:16 AM Flag

    If PZN undeREIT's it has to pay divid.

    If the "other" financing deal goes through and
    PZN doesn't deReit, then it would be subject to the
    Real Estate Investment Trust tax laws which require a
    dividend be paid--AND the service companies would still
    have to be separate and accounted for independently.
    These two deals sound mutually contradictory to me.

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    • I hope so too, because I didn't sell yet.

    • You are probably correct, but who would have
      guessed that the BOD could have, without shareholder
      approval, negotiated a deal with Blackstone that has such
      onerouse back-out terms? Technically, yes, the BOD has to
      put these things to a vote but if they can (without
      shareholder approval) accept criminally high walk-away fees
      (what was it for Blackstone's "expenses" $18 million!)
      I would argue that in reality the BOD can fix the
      game so that they can force an outcome.

      Again,
      you are probably right and I hope so.

    • My belief is that Blackstone can counter in any
      way they wish, but PL can still insist that their
      offer is included in a proxy to shareholders. We can be
      asked to choose between two offers. Unless there really
      is some doubt as to which is better, Blackstone and
      the BOD would be unlikely to present their deal next
      to PL's deal.

      An example of a hostile
      takeover that I am thinking of would be Wells Fargo's
      rather disasterous purchase of First Interstate. First
      Interstate, from the BOD down to line employees, opposed the
      offer ferociously. They had a legitimate white knight
      making viable offers (a Minnesota bank I believe - I've
      forgotten which one). In any case, Wells just kept raising
      their bid and in the end got First Interstate because
      they were willing to pay more than it was worth. Of
      course, the unhappy First Interstate employees left in
      droves, Wells found that they could not manage what they
      bought, and the deal turned out to be a disaster for
      Wells shareholders (but great for First Interstate
      shareholders if they cashed out). Then another Minnesota bank
      bought Wells (poetic justice).

      This kind of
      history suggests to me that a BOD can not refuse to
      present an offer to shareholders, even when they do have
      a reasonable counter-offer. The shareholders have
      the right to vote on any offer.

    • I have no knowledge of what a BOD is required to
      do in a situation like this. When I read the
      recently published stuff, I see things like "Blackstone
      has the right to counter any offer..." and it makes
      me wonder - what if Blackstone makes some silly
      changes to their original proposal and makes it slightly
      better for us and then the BOD looks at it and says
      "Yup, that's better than Pacific Life's. We'll take
      it!".

      Again, I just don't know the legal
      requirements.

      I agree with your assessment of PZN's value with
      the Blackstone offer; that's why I sold around $5.

    • the only things in life that are inevitable.

 
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