Friday, 07 April 2017 08:15 AM
Upcoming AWS Coverage on Ventas
LONDON, UK / ACCESSWIRE / April 7, 2017 / Active Wall St. blog coverage looks at the headline from real estate investment trust The GEO Group, Inc. (NYSE: GEO) as the Company, which is focused on correction and detention centers, announced on April 06, 2017, that it had closed the previously announced acquisition of New Jersey-based Community Education Centers (CEC). The all-cash transaction was announced in February 22, 2017, and valued at $360 million.
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One of GEO Group's competitors within the REIT - Healthcare Facilities space, Ventas, Inc. (NYSE: VTR), is estimated to report earnings on May 05, 2017. AWS will be initiating a research report on Ventas following the release of its next earnings results.
Today, AWS is promoting its blog coverage on GEO; touching on VTR. Get all of our free blog coverage and more by clicking on the link below:
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Commenting on the completion of the acquisition, George C. Zoley, Chairman and CEO of GEO Group said:
"This important transaction further positions GEO to meet the demand for increasingly diversified correctional, detention, and community re-entry facilities and services and will allow us to expand the delivery of enhanced in-prison rehabilitation including evidence-based treatment, integrated with post-release support services, through our industry-leading ‘GEO Continuum of Care."
About the two parties to the merger
GEO Group – The Company is an REIT that concentrates on design, financing, development and operation of correctional, detention and community re-entry facilities. It offers its services to government agencies across the globe and it has operations in the US, UK, Australia, and South Africa. It is supported by a professional workforce of over 23,500 people worldwide. GEO Group reported annual total revenues for FY16 was $2.18 billion compared to total revenues of $1.84 billion in FY15.
CEC – The Company was founded in 1996 and is a leading national provider of a wide range of rehabilitative and correctional services to offenders in re-entry and in-prison treatment facilities. They also offer comprehensive services to manage county, state, and federal jail and detention facilities. CEC's annual revenues mainly come from contracts of which 70% revenues are from contracts with state governments and 20% revenues are from contracts with local jurisdictions.
The deal
With this acquisition, GEO Group will be able to expand its services and meet the growing demand for Correctional, Detention, Re-entry, and Rehabilitation Services. GEO Group will acquire CEC in an all-cash transaction excluding transaction related expenses. The transaction does not cover taking over of any debt of CEC. CEC will be absorbed into GEO Group's business verticals - GEO Corrections & Detention and GEO Care.
How GEO benefits from the acquisition?
GEO Group will be able to add CEC's 12,000 owned or managed beds located across the US to its existing capacity. These include CEC owned or leased 3,800 community re-entry beds, 300 beds managed at three government-owned re-entry centers plus approximately 4,500 correctional and detention beds owned or leased by CEC's Corrections Division and an additional 3,700 beds as operated by it at government-owned correctional facilities purely on contractual basis. Once the transaction is complete, GEO will have approximately 99,000 beds owned or managed by it in over 142 locations including more than 10,000 community re-entry beds.
The acquisition will result in additional annual revenues of $ 250 million. The annual net cost synergies of approximately $5 million will be accretive within 9-12 months of the finalization of the merger. The transaction will be moderately accretive in 2017 due to the one-time transaction and transitional costs; however starting from 2018 the deal is expected to be 9%-11% accretive to adjusted EBITDA on a fully annualized basis.
Stock Performance
On Thursday, April 06, 2017, the stock closed the trading session at $46.63, rising slightly by 0.50% from its previous closing price of $46.40. A total volume of 643.91 thousand shares have exchanged hands. GEO Group's stock price surged 30.38% in the last three months, 106.43% in the past six months, and 52.48% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 31.83%. The stock is trading at a PE ratio of 24.16 and has a dividend yield of 6.00%. Its market capital stands at $3.82 billion.
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