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The GEO Group, Inc. Message Board

  • mcprison mcprison Apr 17, 2002 12:21 PM Flag

    News on Wackenhut sale

    The Palm Beach Post

    April 6, 2002 Saturday FINAL EDITION


    LENGTH: 453 words


    BYLINE: Stephen Pounds, Palm Beach Post Staff Writer


    Attorneys for shareholders suing The Wackenhut Corp. over its sale to Danish
    security firm Group 4 Falck still believe management could have found a better deal,
    despite the company's preliminary proxy filed last week with the Securities and
    Exchange Commission.

    They have asked to consolidate three shareholders' suits over Group 4's $33-a-share
    offer for Wackenhut and hope to file an amended complaint within two weeks using
    fresh ammunition from the proxy. The company said in its proxy that the lawsuits
    could derail the sale. "In our complaint, we intend to raise issues such as price
    concerns. Class A shareholders are getting a haircut while class B are getting a
    premium," said attorney Paul Geller of Boca Raton.

    Geller referred to Wackenhut's two classes of stock and their trading prices before
    the deal.

    On March 7, the day before the deal was announced, Wackenhut's class A voting
    stock closed at $34.40 a share while class B nonvoting stock closed at $27.44.

    According to the proxy, an undisclosed company contacted Wackenhut in February
    about a deal, but the two firms never made it past preliminary talks.

    "We don't know what type of company it was, whether a specific offer was made or
    whether they were recontacted before inking the deal," Geller said.

    In the Group 4 deal, Wackenhut was given 30 days to find another suitor. But after
    reading Wackenhut's proxy, Geller wonders whether that was enough time.

    "When you look at how long it took to iron out the Group 4 deal, it is woefully
    inadequate," he said.

    The two companies negotiated the sale over seven months.

    Geller said information in the proxy about the role of investment banker Salomon Smith
    Barney in the deal isn't ample.

    When discussions between the two companies grew serious in November, Wackenhut
    brought in the banking house to advise it.

    Then on March 7, Wackenhut's board asked Smith Barney to render an opinion about
    whether the offer was fair "from a financial standpoint" to shareholders. Wackenhut
    has not said how much Smith Barney will be paid or whether it's contingent on the
    deal's closing.

    "Are they an objective and independent financial adviser giving an impartial opinion or
    are they an interested party?" Geller said.

    Wackenhut and Smith Barney would not comment.

    Geller said the employment contract of Chief Executive Richard Wackenhut was
    modified on Feb. 19 and the proxy should have given shareholder more information
    about the change.

    "We were disappointed that it was not adequately addressed," Geller said.

    The Group 4 deal is expected to close in June. A final proxy will set a date for a
    shareholders meeting on the sale.

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