In 1954, former FBI agent George Wackenhut and three FBI buddies formed a private detective firm in Miami. In 1955, the firm moved into the security guard business after winning a contract with National Airlines. In 1958, Wackenhut bought out his partners and incorporated as The Wackenhut Corporation. Thereafter, the company continued to grow in the security business. Today, with 68,000 employees worldwide, corporate revenues in 2001 reached $2.81 billion.
In 1901 in Denmark, Philip Sorensen founded the company that was to become Group 4 Falck. Joergen PhilipSorensen, Chairman of Group 4, is the grandson of the founder. Group 4 has grown into the world's second largest security firm with operations in 50 countries, 140,000 employees, and 2001 revenues of $2.47 billion.
In March 2002, Group 4 Falck of Copenhagen and Wackenhut Corporation of Palm Beach Gardens, Florida, reached agreement where Group 4 would pay $573 million to acquire Wackenhut. The Danish company agreed to pay $33 per share for all of the Class A and Class B shares of Wackenhut stock.
After 48 years, George Wackenhut, still active in daytoday corporate operations, will cash out with $124 million. "It's like giving up your baby," said the 82yearold founder.
Richard Wackenhut, the firm's chief executive officer and the founder's son, will receive $61.9 million from the deal including a $30.9 million buyout of his employment contract.
The details of the Group 4 takeover did not disclose what would happen to Wackenhut Corrections Corporation (WCC), a separate, publicly traded corporation (NYSE: WHC) with 2001 revenues of $562 million.
WCC provides private correctional management, health services, facilities, and mental health rehabilitation programs worldwide. WCC manages approximately 43,000 beds in North America, Great Britain, Australia, South Africa, and New Zealand while providing related services such as prisoner transportation, electronic monitoring for home detention, and correctional health care. WCC employees number about 10,000 worldwide.
The management of WCC does not expect the sale of the parent corporation to materially change WCC's corporate structure nor its ability to win new and service existing contracts.
Wackenhut Corporation owned 57 percent of WCC and that ownership transferred to Group 4 when the sale was consummated. The remaining 43 percent is owned by outside shareholders.
Group 4 hinted it may sell some or all of Wackenhut's prison business but industry observers wonder who would buy it. Corrections Corporation of America (CCA), the Nashvillebased private prison operator, is a candidate buyer but most Wall Street analysts believe CCA already has too much debt. CCA's total outstanding debt at the end of 2001 was $964 million and, despite their recently announced refinancing plans, the Nashville company remains on Standard & Poor's Credit Watch.
Some analysts believe that Group 4, which runs prisons overseas, is the most logical buyer for the 43 percent of WCC it does not already own. To do the deal, however, they'd need to come up with another $160 million.
Sources: The Miami Daily Business Review ,the Palm Beach Post , PR Newswire Europe, The Tennessean ,The Wall Street Journal .
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