- The Washington Times - Saturday, March 9, 2002

Group 4 Falck, a Danish security and emergency-services provider, bought out Palm Springs, Fla.-based security firm Wackenhut Corp. yesterday for $570 million.

Wackenhut will be Group 4 Falck's first foray into the U.S. market, where demand for security and emergency services has been on the rise since September 11. The Copenhagen-based company will pay $33 per share for Wackenhut stock.

Group 4 Falck's entry into the United States underscores its multinational business base. The company employs about 140,000 in 50 countries, with core activities including guarding, fire and ambulance services and management of prisons and detention facilities.

"We are delighted with the agreement we have made with Wackenhut," said Lars Noerby Johansen, Group 4 Falck's president and CEO. "Combining with Wackenhut now offers Group 4 Falck an attractive, high-quality and substantial platform in the $14 billion U.S. security guarding market."

Wackenhut, the largest U.S. security firm, employs 68,000, and had revenues of $2.8 billion 2001. The company's stock, which trades on the New York Stock Exchange, has soared in recent months as demand for security guards across the country has increased. But third-quarter profits last year slumped 71 percent as the company paid down debts at its unit in Chile.

Some analysts indicated Group 4 Falck may be overpaying for Wackenhut.

"It's a pretty steep price they're paying for a company that doesn't seem to be run very well," Morten Friis, an analyst with Sydbank told Bloomberg News yesterday.

As part of the acquisition, Group 4 Falck will acquire 57 percent of Wackenhut Corrections Corp., a separate publicly traded company that is a subsidiary of Wackenhut Corp.

Wackenhut Corrections Corp. runs prisons and detention centers in the United States and overseas. It operates the majority of Australia's immigration-detention centers, and recently entered into a partnership to operate a new maximum-security prison in South Africa. Wackenhut Corrections Corp. employs 10,000 people worldwide.

Group 4 Falck said yesterday that it has not decided whether to keep Wackenhut Corrections Corp. or sell it.

Mr. Johansen indicated the company might be inclined to focus on security and guarding rather than facilities operations.

No layoffs were announced by either Group 4 Falck or the Wackenhut companies. Representatives from all firms could not be reached late yesterday.

Shares of Wackenhut Corp. dropped 59 cents to close at $34.40 on the New York Stock Exchange yesterday, and shares of Wackenhut Corrections Corp. fell 40 cents to close at $16.45.

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