Month: July 2016

Latest Headlines

Humana, Aetna reportedly still talking with DOJ to overcome deal opposition; Papa John’s sued over IT exec it poached from Panera Bread

A news summary focused on 10 big employers; updated 5:59 p.m.

HUMANA and Aetna remained in discussions with the Department of Justice today, trying to convince antitrust regulators their $37 billion merger will be good for seniors in the Medicare Advantage market, CNBC is now reporting.

Humana logoBut the two insurance giants are prepared to fight in court if their deal is blocked, a move DOJ antitrust regulators could take within just days, according to the business news cable channel, which is citing people familiar with the discussions who spoke on condition of anonymity because of the sensitive nature of the negotiations. “The insurers have offered up divestitures and secured buyers,” according to CNBC, “with contracts ready to be signed, for assets in local markets where their coverage overlaps, according to one source. But so far, the DOJ has not been convinced by the offer” (CNBC).

Aetna logoReflecting renewed investor optimism, Humana shares climbed 3% today, closing at $158.41 a share, up $4.77; shares had fallen 10% yesterday on initial reports the DOJ was moving to block the deal. Aetna’s stock rose 1.2%, to $116.49 (Google Finance).

To secure shareholder approval of the deal, Humana’s proxy solicitor, D.F. King & Co., made more than 40,000 phone calls to individual investors last fall (Wall Street Journal).

PAPA JOHN’S: Panera Bread Co. has filed a lawsuit claiming a former technology executive who left to work for Papa John’s took trade secrets with him. The suit filed yesterday in U.S. District Court in St. Louis against Papa John’s and the executive, Michael Nettles, says he worked four years as a vice president in Panera’s IT department, with access to highly sensitive trade secrets, and that his move to Papa John’s violates a confidentiality and non-compete agreement. Nettles joined Papa John’s on Monday. Panera is based in suburban St. Louis (Post-Dispatch).

Latest Headlines

Yum investors must now go to Charlotte, N.C., to settle disputes with the company. (Take note: Keith Meister)
Louisville to Raleigh
Yum is officially headquartered in Louisville, but its corporate HQ is actually a three-hour flight away, in Raleigh, N.C.

In a new filing with the Securities and Exchange Commission today, Yum said it made an important amendment to its corporate bylaws that now requires disputes between shareholders and the company be handled in North Carolina’s court system.

Why that state? Because, even though Yum is headquartered in Louisville — and the top brass works part of the time in suburban Dallas — the company itself is incorporated in North Carolina, where the fast food giant’s principal office is in Raleigh. (Of course, that office might be little more than a mailbox drop.) Adding a little confusion, the specific court is actually 167 miles away, in Mecklenburg County’s Charlotte.

Keith Meister
Meister

The SEC filing doesn’t say what prompted the company to choose the N.C. court system. But it follows a high-profile dispute between dissident stockholder Keith Meister of Corvex Management that ended last fall when he was given a seat on the board of directors. Corvex had built up a 5% stake to press the company into spinning off its flagging China Division, a step it’s planning to complete by Oct. 31.

Yum’s 12-member board of directors approved the bylaw change last Friday, according to today’s SEC 8-K filing. It’s a new Section 9 of Article 8 called “Forum for Adjudication of Certain Disputes.” Here’s the full text: Continue reading “Yum investors must now go to Charlotte, N.C., to settle disputes with the company. (Take note: Keith Meister)” →

Media and Marketing

PR exec Jennings says ‘bloodthirsty thought police’ chased Cobb off UofL board of trustees

A Louisville public relations executive and former advisor to Republican U.S. Senator Mitch McConnell has attacked the news media for whipping up a “feeding frenzy” over controversial tweets by businessman Douglas Cobb that led to his withdrawing as one of Gov. Matt Bevin’s appointees to the new University of Louisville board of trustees.

In an op-ed piece in today’s Courier-Journal, Scott Jennings of RunSwitch PR writes:

Scott Jennings
Jennings

“I don’t necessarily agree with some of Cobb’s tweets, which were breathlessly reported by the bloodthirsty thought police who turned his opinions on Christianity, global warming and sports into a shooting gallery at their ridiculous carnival. But Cobb has a right to express an opinion, and we should be mortified that our town’s unelected information gatekeepers are personally deciding not only who is fit to serve but what opinions disqualify someone from serving.”

Douglas Cobb
Cobb

Cobb, a venture capitalist and former CEO of Greater Louisville Inc.’s predecessor organization, turned down his university board appointment July 12 , two weeks after news reports said he’d tweeted climate change was a hoax; evolution was for patsies, and “gay Christian” was an oxymoron. Cobb initially defended his views, but then deleted his Twitter account entirely.

Run Switch has been a University of Louisville Foundation vendor, according to the CJ. Jennings co-founded the agency in 2012. In addition to advising McConnell, he was a special assistant and deputy White House political director for President George W. Bush.

Latest Headlines

Analysts: Papa John’s outlook brighter amid civil unrest; Humana stock edges up after DOJ shocker; and Louisville’s big on $1,500 apartments

A news summary focused on 10 big employers; updated 10:39 a.m.

Papa John's vs. S&P July 20
Papa John’s stock, in blue, has zoomed ahead of the S&P 500 index over the past three months, when civil unrest has been in the news.

PAPA JOHN’S stock jumped 3.7% to $71.69 a share in the first hour of trading, after Wall Street analysts upgraded the Louisville pizza chain on the surprising view that diners, concerned about political and civil unrest, are choosing to stay home for pizza delivery rather than go out for a meal. “After speaking with several large operators and industry contacts,” KeyBanc Capital Markets analysts said yesterday, “we believe the recent decline in casual dining restaurant segment fundamentals — traffic down 3% to 5% the past several weeks — may be the result of consumers eating more at home amid the current political/social backdrop, which we believe could last through the November election.” The company’s stock has jumped 22% in the last three months vs. a much smaller 3% gain in the broader S&P 500 index (MarketWatch and Google Finance). Louisville-based Papa John’s employs 750 workers at its headquarters, and another 21,000 across the globe. More about the company.

HUMANA‘s stock rose 74 cents to $154.12 a share a day after word surfaced the Justice Department was poised to block the Louisville insurer’s $37 billion acquisition by Aetna of Hartford. Aetna climbed 74 cents to $115.84. Yesterday, Humana tumbled 4%, and Aetna fell 2.7% (Google Finance). Humana employs 12,500 workers in its Louisville corporate hometown.

KFC: In New Zealand, franchisee Restaurant Brands hasn’t ruled out home delivery of KFC now that McDonald’s has started offering the service. But CEO Russel Creedy said KFC had tried home delivery before and found customers preferred drive-throughs rather than waiting for their chicken to be brought to their front door. Creedy’s franchise already has experience with delivery through its Pizza Hut restaurants (New Zealand Herald).

FORD‘s Flat Rock Assembly Plant south of Detroit — where the popular Mustang and Fusion are built –- caught fire around 7 last night and forced a partial evacuation of the sprawling 400-acre complex that employs 3,200 workers. No injuries were reported (Detroit Free Press). In Louisville, Ford employs nearly 10,000 workers at two vehicle and truck assembly factories.

Amazon logoAMAZON is signing up amateur drivers in the U.K. to deliver packages in their spare time from distribution centers to customers’ homes, expanding a system it started last year in its corporate hometown of Seattle. Starting this month in Birmingham, a smartphone app will allow the company’s part-time mules to choose when and where they want to work, as well as guiding them to customers’ homes and allowing customers to track their orders (Financial Times).

PIZZA HUT: With the Aug. 5 start of the Summer Olympics closing in, Pizza Hut has launched its patriot-themed Big Flavor Dipper in a red-white-and-blue box emblazoned with “Go USA!”

In other news, Louisville ranked No. 6 among 30 U.S. cities offering the biggest apartments renting for $1,500 a month, according to a new Rent Cafe report. The top 10:

  1. Memphis: 1,948 square feet
  2. Oklahoma City: 1,786
  3. Indianapolis: 1,724
  4. El Paso: 1,667
  5. Columbus, Ohio: 1,667
  6. Louisville: 1,648
  7. Jacksonville, Fla.: 1,579
  8. Las Vegas: 1,546
  9. Phoenix: 1,415
  10. Fort Worth: 1,389

In contrast, New York City had the smallest apartments, at 271 square feet (MarketWatch and Rent Cafe).

Latest Headlines

DOJ REPORTEDLY SET TO BLOCK $37B HUMANA-AETNA MERGER; OPPOSITION COULD BE DEAL’S DEATH KNELL; HUMANA STOCK DIVES 4%; ANTHEM-CIGNA ALSO SAID IN DOUBT
Humana vs. Aetna July 19
The downside risk of a failed deal is greater for Humana than for Aetna, as reflected in this Google Finance chart showing the path of their stocks since opposition first surfaced; Humana is in blue, Aetna in red.

The Justice Department’s final decision on whether to sue to block Aetna’s $37 billion acquisition of Louisville-based Humana could come this week or next, Bloomberg News and other media outlets are now reporting; latest news developments at 4:50 p.m.

The DOJ’s move would represent strong government pushback against consolidation in the health-insurance industry, according to The Wall Street Journal.

Humana building
Humana headquarters.

The companies could settle a lawsuit before or after one is filed in order to save the deal, according to Bloomberg, perhaps by shedding even more assets than they’ve already offered.

Hartford-based Aetna and Humana will probably fight any lawsuit in court, while Anthem and Cigna are less likely to litigate against the government, Ana Gupte, an analyst at Leerink Partners, told Bloomberg.

The DOJ’s antitrust division is also preparing a suit to block a similar merger between Anthem and Cigna.

Shares of Humana and Aetna fell sharply on the news. At the close of trading, Humana tumbled 3.9%, or $6.26, to $153.38. Aetna fell 2.7%, or $3.21, to $115.15. Earlier in the day, Humana traded as low as $150 — lowest since it hit $148 in February 2015, according to Google Finance.

An Aetna spokesman told The Wall Street Journal it “doesn’t comment on rumors and speculation, but we are steadfast in our belief that this deal is good for consumers and the health-care system as a whole.” Humana spokesman Tom Noland did not immediately respond to a Courier-Journal request for comment.

Justice Department officials are concerned the deals, which would transform the health-insurance industry by turning its five biggest companies into three, would harm customers, according to several people familiar with the situation cited by Bloomberg. “While the companies may offer to sell assets to gain approval for the deals, that’s unlikely to sway antitrust officials, one of the people said,” according to the news service.

Hints of trouble ahead

The DOJ’s opposition isn’t entirely surprising. Less than two weeks ago, Continue reading “DOJ REPORTEDLY SET TO BLOCK $37B HUMANA-AETNA MERGER; OPPOSITION COULD BE DEAL’S DEATH KNELL; HUMANA STOCK DIVES 4%; ANTHEM-CIGNA ALSO SAID IN DOUBT” →

Media and Marketing

Courier-Journal owner Gannett Co. says it isn’t imposing an editorial agenda on the Louisville newspaper

Gannett Co. is increasingly coordinating news coverage between The Courier-Journal and its approximately 100 other daily newspapers via what it calls the USA Today Network. But the company’s chief content officer — equivalent to a super-editor — tells Nieman Lab it isn’t imposing a top-down editorial agenda.

Joanne Lipman
Lipman

“A really important part of the network is empowering journalists in any newsroom to come up with an idea,” says Joanne Lipman, a former Wall Street Journal editor who’s been leading the network since January. “We can support them on any idea that they might have.” She offered an example:

“A reporter at one of our smaller properties in Florida came up with a really Continue reading “Courier-Journal owner Gannett Co. says it isn’t imposing an editorial agenda on the Louisville newspaper” →