HUMANA and Aetna now face an uphill battle persuading antitrust enforcers their planned $37 billion deal won’t harm competition, after high-level talks between the Justice Department and company officials yesterday ended without public word of their outcome. It isn’t clear when the agency will make a final call. Company officials have been preparing for a decision as soon as this month, according to The Wall Street Journal, which cited people familiar with the matter that the newspaper didn’t identify. But officials also disclosed June 24 that they’d extended the deadline for completing the deal until the end of the year.
Humana’s stock has been reeling since news of the negotiations suddenly emerged mid-day Thursday; shares have fallen 11% since the day before. Aetna’s stock has fallen, too, but by a far smaller 2%, reflecting what investment bank JP Morgan said yesterday is the Louisville company’s greater downside risk if the deal collapses (chart, top).
JP Morgan downgraded Humana’s stock to “neutral” from “overweight,” after the probability of a deal approval declined well below a 50/50 chance, analyst Gary Taylor said. If the deal were not to happen, Humana’s shares could fall to a range of as low as $115 to $125. At $115, Humana would have sunk to the lowest level since May 6, 2014, when shares closed at $109.79.
That grim outlook isn’t universal. Wedbush Securities analyst Sarah James told CNBC: “We’re 80 to 90% confident that the Aetna deal is going to go through,” she said (CNBC).
The developments at Humana-Aetna and two other companies also planning a merger — Anthem and Cigna, for $48 billion — “are the latest signs that federal officials are worried about consolidation among health insurers,” the WSJ says. The deals “would reshape the top of the industry, collapsing five large insurers into three giant firms, each with annual revenues of more than $100 billion” (Wall Street Journal).
Humana’s stock has tumbled 12% over last three days.
The probability of the Justice Department approving the deal has now declined well below a 50/50 chance, JP Morgan said in a report today. If the deal bombed altogether, the Louisville insurer’s shares could fall to a range of as low as $115 to $125, the investment bank said.
Humana’s unexpected plunge came as suitor Aetna was to meet with top Justice Department officials today as it seeks to win antitrust approval for its takeover of Louisville-based Humana, multiple media outlets have been reporting. The Hartford insurer’s meeting was to include the DOJ’s No. 3 official, a top-level gathering that signals the review is entering a final, make-or-break stage, according to Bloomberg News, which cited sources it didn’t identify.
“We have long held that only HUM shares have material downside if the DOJ were to block the pending acquisition by Atena,” JP Morgan’s Gary Taylor said in in his report.
Humana’s stock closed moments ago down 2.7%, or $4.35 a share, to $158.15. It fell another $1.14 in extended trading. Yesterday, it fell a far steeper 10% on sales volume more than six times normal — the biggest one-day drop in four years. It was Humana’s lowest closing price since Feb. 12, when shares hit $160.37.
Aetna’s stock was recently up 1.3%, or $1.43, to $116.89; yesterday, it closed down 4%.
Humana tower downtown.
“The meeting falls two weeks after a similar Justice Department session with Anthem and Cigna, which are pursuing their own $48 billion merger,” Reuters said. “While department officials are concerned that the Anthem-Cigna tie-up may stifle competition, Aetna is arguing that its deal is different: It maintains that its overlap with Humana is small and any loss of competition is easily fixable, according to a person familiar with the insurer’s thinking who, like the others, asked not to be identified discussing a private matter.”
AMAZON customers in more than 25 U.S. metro areas will be able to get near-immediate delivery of more than 500 items during the e-commerce giant’s second annual Prime Day, a 24-hour extravaganza of extra savings over the retailer’s usual discounts set for July 12. Louisville isn’t one of the eligible cities; the closest is Cincinnati. 😦 Amazon also announced yesterday that first-time Prime Now customers will get $10 off their order when they use the 10PRIMENOW promotional code on orders placed between today and July 12. They will also receive another code later for another $10 off Prime Orders placed later in the month (Cnet and press release).
Prime Day is a big deal in Louisville. The retailer employs 6,000 workers in the Louisville area at mammoth distribution centers in Jeffersonville, and in Bullitt County’s Shepherdsville. Plus, one of Amazon’s biggest shippers is UPS; with 22,000 workers at its Louisville International Airport hub, it’s the city’s single-biggest private employer.
FORD family scion and director Edsel Ford II won’t face criminal charges after being arrested for suspected misdemeanor domestic violence involving his wife Monday night at their Grosse Point Farms home, according to several news media reports this morning.
Edsel Ford
Ford, 67, great-grandson of founder Henry Ford, spent the night in jail after his arrest, but was released yesterday after the city prosecutor’s decision to not bring charges, according to the Detroit Free Press. He was arrested at about 11:30 p.m. Monday after police were called to the suburban Detroit home he shares with wife Cynthia Ford; alcohol was involved.
Late last night, Cynthia Ford issued a statement denying the incident amounted to domestic violence. “I stand behind true victims of domestic violence and I am not one of them,” she said, the Free Press said in a separate story. “My husband and I ask that you respect our privacy and that of our family. We are working in the right direction to heal from this experience and move forward.”
Winning robot in an Amazon competition picked items off a shelf at a speed of about 100 per hour, much worse than the average 400 by humans.
AMAZON awarded a robotics prize to a team from the TU Delft Robotics Institute in the Netherlands and the company Delft Robotics in the retailer’s second-annual competition to find robots that will someday work alongside humans — or in place of them — in Amazon’s massive distribution centers. At the contest in Germany’s Leipzig, Delft’s robot picked items from a mock warehouse shelf at a speed of around 100 an hour with a failure rate of 16.7%. That’s slow compared to what a human can manage (around 400 items an hour), but a big improvement over last year’s winner, which managed just 30 items an hour. This was the second year for the competition (The Verge). Amazon employs 6,000 workers in the Louisville area at mammoth distribution centers in Jeffersonville, and in Bullitt County’s Shepherdsville.
PIZZA HUT: In South Korea today, another 25 franchisees filed a lawsuit seeking repayment of $657,553 the restaurant chain’s Korean national headquarters charged them for marketing and other services — fees the franchise owners said were unjustified. Their suit came a week after the Seoul Central District Court ruled in favor of 88 other owners who had asserted the came claim. The dispute dates to March 2007, when the headquarters demanded franchises remit 0.55% of their profits on grounds they’d benefited from marketing, operational, and customer-service counseling provided by the head office. In April 2012, headquarters boosted the fee again, to 0.8%, and required owners sign another contract agreeing to pay the charges. It also unilaterally nullified contracts with owners that either failed to pay the fee or delayed payment (Korea JoongAng Daily).
HAIER‘s appliances, electronics and ductless air conditioners were incorporated into one of Cocoon9’s container homes at last week’s Dwell on Design residential trade show in Los Angeles. The prefab “plug-and-play houses” contain smart technology, energy efficiencies and versatile spaces, delivered fully assembled with quality construction and high-end finishes within four months (Twice). Haier bought GE Appliances last month for $5.6 billion and its 6,000-employee Appliance Park in Louisville’s southend.
PAPA JOHN’S: In the U.K.’s Hull, Papa John’s is opening as many as four restaurants over the next year in the Kingdom’s next “City of Culture,” according to a shy franchise owner (the local newspaper says he “asked not to be named at this time”) who says the eateries could create as many as 25 jobs per location. They would be the city’s first Papa John’s (Daily Mail). All about the U.K.’s cities-of-culture program.
HUMANA is moving more than 120 employees in downtown Jacksonville, Fla., to two new separate locations as part of a broader effort to put sales and service workers in retail settings closer to members (Daily Record).
Rae
In New Zealand, a reformed “KFC queen” has gone public about her efforts to lose weight in a newspaper series the paper very awkwardly describes as being about a group “taking responsibility for their own health within a family-based, non-judgmental environment that supports all levels, sizes and ages.” Rachel Rae told the Taranaki Daily News: “I loved junk food, I loved fish and chips, and I was known as the KFC queen. I would go there about three times a week. Whatever was quick, filling and fattening — sounds gross eh?” (Daily Star).
In Japan, KFC is offering all-can-eat-in-45-minutes meals every Wednesday night between July 13 and Aug. 31, further expanding a special promotion once only offered on founder Colonel Harland Sanders‘s Sept. 9 birthday (Rocket News 24).
And in Australia’s Brisbane, KFC told diner Eden Hoffschildt that what she thought was a chicken’s brain cooked into in a recent meal was actually a kidney. “There is no health risk associated,” the fast-food chain said, in a reply to Hoffschildt’s Facebook posting about the incident. “The kidney is actually present in the thigh piece of chicken supplied by most leading Aussie chicken suppliers and can actually be found in cooked chicken bought from most leading supermarket” (Courier Mail). It was the second case in the past week of the wrong chicken part found in a Brisbane restaurant meal, and one of a series in recent years at other KFCs in Australia, the U.K., and the United States.
Australia’s nickname is Oz, which is another reason why this scene from the 1939 classic is so apropos:
In other and less gross news, tonight’s Mega Millions lottery jackpot is now an estimated $449 million. That would be the seventh biggest jackpot of all time, including the even better-known Powerball (WDRB). Blaming the Obama Administration’s energy policies, Murray Energy of Clairsville, Ohio, says it could lay off up to 4,400 coal miners by September in Kentucky, Ohio, West Virginia, Illinois, Utah and Pennsylvania (WDRB, too). In the year’s first three months, statewide coal employment plunged 18%, to 6,900 — lowest in 118 years (Herald-Leader). A 26-year-history of coal losses, county-by-county (WFPL).
AMAZON said this year’s 24-hour Prime Day sale would include more than 100,000 specially discounted items. U.S. members can shop starting at 3 a.m. ET/midnight PT, with new deals as often as every five minutes (press release). Last year, in addition to a 266% increase in orders vs. the same day in 2014, Prime Day also spurred more people than ever to try the $99-a-year Prime service. It also drove more sales than any of the retailer’s previous events — even beating Amazon’s 2014 Black Friday (The Verge). Apparently responding to complaints last year that some items sold out too quickly, Amazon said this year it would “dramatically” boost inventory and make it easier to search for deals by sorting through categories (Cnet).
Amazon employs 6,000 workers in the Louisville area at mammoth distribution centers in Jeffersonville, and in Bullitt County’s Shepherdsville. Plus, another big Prime Day is good news for the retailer’s shipper, UPS; with 22,000 workers at its Louisville International Airport hub, it’s the city’s single-biggest private employer.
HUMANA: Two Connecticut activist groups and the state’s medical society have criticized regulatory reviews of the proposed $37 billion Humana-Aetna merger in a letter this week to the U.S. Justice Department; they’re asking the trust-busters “to protect people from the harm these mergers will cause.” Aetna is based in Hartford. The groups, which also criticized a similar planned merger between Anthem and Connecticut-based Cigna, were joined by 40 other state doctors’ associations and health-care charities nationwide (Hartford Courant). Humana employs 12,500 workers at its downtown Louisville headquarters and other sites across the city.
UPS and the 2,500-member Independent Pilots Association today announced a tentative agreement on a new five-year labor contract, including improvements across all sections. Specific details of the agreement will not be disclosed before the IPA presents the proposed contract to all UPS pilots (press release).
Also, a looming pilot shortage will soar to 15,000 by 2026, according to a study by the University of North Dakota’s Aviation Department, as more captains reach mandatory retirement age of 65, and fewer young people choose aviation as a profession. “And that’s in an industry,” says the Dallas Morning News, “where captains on the biggest international jets average more than $200,000 a year — with some pushing $300,000” (Morning News).
FORD‘s decision to bypass an employee for a position based on his use of opioids was not enough to prove his disability discrimination claim, the U.S. Sixth Circuit Court of Appeals has found (National Law Review). The automaker employs nearly 10,000 workers at its auto and truck factories in Louisville.
PIZZA HUT: In New Orleans, police arrested a man and woman early yesterday who allegedly carjacked a Pizza Hunt deliverer’s car at gunpoint Tuesday night, then led cops on a car chase before they were apprehended. The driver told officers he was making a delivery about 11:30 p.m. when a woman who said she placed the order — Simonne Walker, 19 — approached him. But instead of paying him, the woman’s companion — Kenneth Rainer, 20 — walked up, put a gun to the driver’s back, and demanded cash and his car keys. Walker and Rainer then got into the car and sped off, the cops say (Times-Picayune).
BROWN-FORMAN is promoting its Chambord black raspberry liqueur through a “Just Add Chambord” Royale cocktails campaign starting tomorrow. The campaign targeting hotel bars and lounges runs through Sept. 30. The Louisville spirits giant will supply participating establishments with Chambord-branded flute glasses, recipe and tent cards. Nidal Ramini, marketing chief for Bacardi Brown-Forman brands said (in a very odd quote): “We are confident the new platform will inspire the on-trade in particular, to transform and elevate serves, whilst helping them understand how Chambord can be the perfect way to elevate a simple glass of bubbles, and ultimately increase profit” (Harpers). Here’s the Royale recipe.
Tightening his grip on the University of Louisville, Gov. Matt Bevin today added 10 more members to his reconfigured board of trustees, appointing a slew of business heavy hitters, including at least one with long family ties to the board.
Among them: Papa John’s founder and CEO John Schnatter; Glenview Trust Co. founder and chairman David Grissom, who’s also a retired Humana executive; and Brown-Forman heiress Sandra Frazier.
Schnatter is a major UofL booster, donating millions for naming rights to Papa John’s Cardinal Stadium. He and conservative industrialist Charles Koch donated $6.3 million to the school in March 2015 to establish an on-campus center to study the virtues of free enterprise; responding to criticism, the university said the money wouldn’t curtail academic freedom.
Frazier
Frazier, who is now cycling off the Brown-Forman board of directors, also is a director of Glenview Trust, a boutique investment firm that serves more than 500 of the area’s wealthiest families. Her late father, Harry Frazier, is a former UofL vice chairman, and her uncle, the late Owsley Brown Frazier, was once chairman.
Bevin’s announcement today follows his surprise June 17 dismissal of the previous 20-seat board, which he called “dysfunctional” in its oversight of the university and President James Ramsey. He replaced them with an interim three-member board, which he filled out with today’s appointments. The school has been roiled with controversy over Ramsey’s seven-figure compensation; a sex scandal involving the marquee men’s basketball program, plus other administrative missteps. Ramsey offered to resign when Bevin dissolved the board, but a final decision on his future was deferred to the next board.
BROWN-FORMAN is promoting its 
Boulevard 