Real estate investment trust The GEO Group is to acquire Community Education Centers (CEC), a private provider of rehabilitative services for offenders in re-entry and in-prison treatment facilities as well as management services for county, state and federal correctional and detention facilities.
GEO will acquire CEC for USD360 million in an all cash transaction, excluding transaction related expenses.
GEO will not assume any debt as a result of the transaction. GEO plans to integrate CEC into GEO’s existing business units of GEO Corrections & Detention and GEO Care.
Founded in 1996, CEC is a national provider of rehabilitative services for offenders through re-entry and in-custody treatment programmes as well as comprehensive management services for county, state, and federal correctional and detention facilities. CEC provides evidence-based programming for residential and non-residential clients through re-entry and correctional facilities, in-prison treatment services, and outpatient and day reporting programmes.
CEC owns and/or manages over 12,000 beds nationwide. Through its re-entry division, CEC owns or leases 3,800 community re-entry beds and manages approximately 300 beds at three government-owned re-entry centres. Additionally, CEC provides in-prison treatment services, including evidence-based rehabilitation programmes, in more than 30 government-operated facilities. GEO plans to integrate CEC’s re-entry and in-prison treatment divisions into GEO Care.
Through its corrections division, CEC owns or leases approximately 4,500 correctional and detention beds and operates an additional 3,700 beds at government-owned correctional facilities under managed-only contracts. GEO plans to integrate CEC’s corrections division into GEO Corrections & Detention. More than 70 per cent of CEC’s annualised revenue is generated from contracts with state governments and more than 20 per cent from contracts with local jurisdictions.
Following the acquisition, GEO will own and/or manage approximately 98,000 beds worldwide including approximately 7,000 community re-entry beds.
George C Zoley, chairman and chief executive officer of GEO, says: “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 re-entry facilities and services across the US. GEO has an extensive track record of successfully integrating acquisitions, and we expect to achieve annualised net synergies of approximately USD5 million as well as revenue growth opportunities, which we believe will continue to enhance long-term value for our shareholders.”
The transaction is expected to close the second quarter of 2017 subject to the fulfilment of customary conditions. The transaction will be supported by a term loan financing commitment from BNP Paribas and borrowings under GEO’s existing Revolving Credit Facility.
“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.’ Our continued efforts to be the leading provider of rehabilitation and re-entry services underscore our commitment to improve the lives of the men and women entrusted to us as well as our belief that as a company, we are most effective and at our best, by helping those in our care, re-enter society as productive and employable citizens,” says Zoley.
