Corrections Corp. of America (CXW) Up After Push from Corvex to Convert to REIT

April 5, 2012 12:19 PM EDT
Shares of Corrections Corp. of America (NYSE: CXW) are 5% higher Thursday after hedge fund Corvex Management LP disclosed a new 7.04% or 7,006,023 share, stake in a 13D filing and is pushing the company to convert into a REIT.

From the filing:
The Reporting Persons believe that the Shares are undervalued and are an attractive investment. The Reporting Persons have had conversations and meetings with each other and the management and members of the board of the Issuer to discuss the Issuer’s business, assets, capitalization, financial condition, operations, governance, management, strategy and future plans and will seek to have additional conversations with one or more of management, the board, other stockholders of the Issuer and other persons to discuss such matters. These discussions have reviewed, and may continue to review, options for enhancing shareholder value through various strategic alternatives, including, but not limited to, proposals for one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D. In particular, and without limiting the generality of the foregoing, the Reporting Persons have discussed, and will continue to discuss, among themselves and with one or more of management, the board, other stockholders of the Issuer and other persons proposals to convert the Issuer to a real estate investment trust (“REIT”) for U.S. federal income tax purposes and other strategic alternatives. The Reporting Persons have engaged experts in the legal, accounting and tax professions who believe that the Issuer could convert to a REIT without material disruption or changes to the Issuer’s current operations. The Reporting Persons believe that a REIT conversion would result in a significantly lower cost of equity capital, increased growth prospects and a material increase in value for all the Issuer’s shareholders based on current trading multiples of comparable publicly traded REITs. The Reporting Persons look forward to working expeditiously with the Issuer’s management and the board in order to effectuate this outcome.

For more notable holders of Corrections Corp. of America stock click here.

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