Cornell shareholders file suit to block GEO takeover

The proposed takeover of

Houston-based Cornell Corrections by their bigger competitor GEO Group may not happen without a legal battle, according to this press release, ("Cornell Companies, Inc. investors file lawsuit," PR Log, April 29),

On April 27, 2010, an investor filed a lawsuit against members of the board of directors, Cornell Companies Inc. and The Geo Group over breaches of fiduciary duty arising out of the attempt to sell Cornell Companies, Inc. (NYSE:CRN) to the GEO Group. 

According to the complaint the plaintiff alleges, among other things, that the proposed acquisition is intended to take advantage of Cornell’s temporarily low current valuation and that the agreement contains certain provisions, like the $12 million termination fee and “no shop” provision that unduly benefit GEO Group by making an alternative transaction either prohibitively expensive or otherwise impossible.

We'll keep you posted on how this and other legal challenges to the GEO-Cornell merger play out.