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Too good a deal for state pension fund?

Some Floridians fret that the state's pension fund may be making a bad investment in Edison Schools, the controversial private company that operates 150 schools across the country. But that's not everybody's take on the pending deal. Some current shareholders think the pension fund is making out like a bandit _ at their expense.

"We're insulted by the fact that they want to buy this company from us at a ridiculously low price," money manager Zack Shafran told Fortune magazine. Shafran is a manager for Waddell & Reed mutual funds, which hold nearly 4-million Edison shares.

In spite of the complaints, the deal is expected to win the approval of Edison shareholders when it comes up for a vote Nov. 12. That's because Edison's stock structure gives founder Chris Whittle and other managers extra voting clout. Fortune calculates that Whittle stands to collect $21-million from the transaction.

Florida's pension fund got involved when one of its money managers, Liberty Partners, put together a bid to buy out Edison shareholders for $1.76 a share, taking the company private. The price tag is $182-million, with the state pension fund putting up most of the money.

When news of the deal became public, it elicited howls of protest from Democratic legislators and public employee unions. One reason is that the company has had only one profitable quarter in its history and the value of its shareholders' investment has plunged from a peak of $36.75 a share.

State officials say that's just the sort of company they want in the "alternative investments" portion of the pension fund. The idea is to acquire underperformers with a sound business objective, get them into shape and sell them at a profit.

Politics was never a consideration, said Coleman Stipanovich, executive director of the State Board of Administration, which oversees the pension fund.