Geo Group on Wednesday announced the acquisition of Community Education Centers (CEC) in a $360 million, all-cash deal.
The Boca Raton-based REIT, which specializes in private prison operations (NYSE: GEO), plans to integrate the company into its existing business units GEO Corrections & Detention and GEO Care.
CEC is based in New Jersey and is a private provider of rehabilitative services for prisoners, and provides management services for government correctional and detention facilities. Founded in 1996, the company owns or manages more than 12,000 beds nationwide.
Following the acquisition, GEO will own or manage 98,000 beds worldwide including, approximately 7,000 community reentry beds.
“This important transaction represents a compelling strategic fit for our company as it further positions GEO to meet the demand for increasingly diversified correctional, detention, and community reentry facilities and services across the United States,” said George C. Zoley, CEO of GEO.
The deal is expected to close in the second quarter of 2017.
“… We expect to achieve annualized net synergies of approximately $5 million as well as revenue growth opportunities, which we believe will continue to enhance long-term value for our shareholders,” Zoley said.
A term loan financing commitment from BNP Paribas and borrowings from GEO’s Revolving Credit Facility will fund the deal, the company said.
GEO’s buyout of CEC is expected to increase its annual revenues by about $250 million. GEO Group’s revenue was $1.61 billion for the nine months ended Sept. 30, 2016.
“This important transaction 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’,” Zoley said.