Correctional Facilities to acquire Youth Services International for 42% of revenue

Weekly Corporate Growth Report, Sep 28, 1998

The Deal: Correctional Services Corporation and Youth Services International have announced that they have entered into a merger agreement. Terms call for each outstanding share of YSI common stock to be converted into 0.375 shares of CSC common stock. YSI will become a wholly-owned subsidiary of CSC. The deal is expected to be accretive to 199 earnings. It will be accounted for as a pooling-of-interests and will qualify as a tax-free reorganization.

Discussion: The deal will enhance CSC's position as a leading developer and manager of privatized juvenile and adult correctional and detention facilities in the US. The combined company will operate 63 programs with nearly 11,000 beds in 20 states and Puerto Rico.

The addition of YSI's traditional and academy programs to CSC's secure programs will allow the company to offer governmental agencies the widest range of quality solutions for adjudicated youth, from first time offenders to the most hardened of criminals.

There is very little overlap in this deal since many of the facilities of each company are in states not yet services by the other. This will also allow for new marketing opportunities. The deal will provide great strategic benefits as access to resources, quality of programs and a commitment to youth will all be greatly enhanced through the deal.

Correctional Services Corporation is a leading developer and manager of privatized correctional and detention facilities in the United States. Through its three divisions, Adult, Juvenile, and Community Corrections, the Company provides a diverse range of programs and services to local, state, and federal government agencies.