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FAST LANE - August
2005
Covington-based Omnicare has increased its standing as one of the nation’s leading pharmaceutical companies with its announcement that the company will acquire RxCrossroads L.L.C., NeighborCare, Inc. and ExcelleRx. The transaction, valued at approximately $1.8 billion, brings Omnicare’s total number of beds served to nearly 1.4 million, an increase of approximately 27 percent. The combined company will have a nationwide network of pharmacies serving long-term care providers in 47 states and the District of Columbia. Omnicare will pay $235 million in cash for the assets of RxCrossroads, a Louisville company that provides specialty distribution, product support and mail-order pharmacy services for pharmaceutical manufacturers and biotechnology companies. RxCrossroads primarily specializes in high-cost drugs used in the treatment of chronic diseases. Omnicare President and CEO Joel F. Gemunder noted that the acquisition of RxCrossroads will distinguish the company as the “only provider of end-to-end custom product solutions to pharmaceutical and biotechnology companies.” Omnicare is acquiring ExcelleRx, a Philadelphia provider of pharmaceutical products and services for hospice agencies, for $268.7 million. Gemunder noted that the hospice industry has experienced double-digit organic growth driven largely by increased familiarity with, and greater acceptance of, the holistic model of care it represents. As an important element in the range of services provided to hospice patients, pharmacies capable of meeting the clinical needs of these patients have participated in the industry’s growth. STATE Ernst & Young has announced the winners of its 2005 Entrepreneur of the Year awards, a program that recognizes the contributions of outstanding entrepreneurs who are building and leading dynamic business ventures. The program honors entrepreneurs through regional, national and global award programs in over 100 cities and 35 countries. This year’s winners for the South Central Ohio & Kentucky region include: Business Services: John Baumann, president and CEO, Ampac, Cincinnati Construction: Denny Rohrer & Jerry Kanney, general partners, Interstate Natural Gas, Pikeville, Ky. Emerging: Kara Trott, CEO, Quantum Health, Columbus, Ohio Financial Services: B. Anthony Weber, president, Veredus Asset Management, Louisville Healthcare: Dr. Cameron Durrant, president, PediaMed Pharmaceuticals, Inc., Florence Manufacturing: Tim Hayden, president and CEO, Rite Track, Cincinnati Retail: Kent Taylor, chairman of the board, Texas Roadhouse, Louisville Technology: Dave Conway, president and CEO, Construction Software Technologies, Inc., Cincinnati Michael J. Burk Award for Supporter of Entrepreneurship: J. Richard Emens, co-founder and executive director, Family Business Center of Central Ohio, Columbus All of the winners were selected by a panel of independent judges comprised of area leaders from business, academic and civic organizations. South Central Ohio & Kentucky winners will be eligible for consideration for the Entrepreneur Of The Year 2005 national program. Winners in several national categories, as well as the overall national Ernst & Young Entrepreneur of The Year, will be announced at the annual awards gala in Palm Springs, Calif., in November. The overall national Entrepreneur of the Year Award recipient is then considered for the world event held in Monte Carlo. SPARTA The Kentucky Speedway has filed a lawsuit against NASCAR and the International Speedway Corporation (ISC), a company partly owned by several high-level NASCAR officials. The lawsuit alleges that NASCAR and ISC have illegally restricted the award of NASCAR Nextel Cup Series races and illegally awarded those races to the ISC. The lawsuit also alleges antitrust violations relating to various restraints of trade involving the NASCAR Busch Series races and the NASCAR Craftsman Truck Series races. Speedway officials say that NASCAR has a monopoly and has abused that power to not only prevent Kentucky Speedway from obtaining a NEXTEL Cup Series race, but from running any competing race or event with top owners and drivers. They also maintain that NASCAR has instituted anticompetitive practices, with the intent of increasing the cost of competition for non-ISC tracks, to the benefit of NASCAR and ISC. Speedway officials are asking that NASCAR be required to award a NEXTEL Cup Series race to the Kentucky Speedway and change rules that they say have prevented competition by tracks for top-level drivers. “In my opinion, the facts clearly support a conclusion that NASCAR and ISC have colluded to exclude competition in order to financially benefit themselves,” said Stan Chesley, an attorney representing the Kentucky Speedway. “By doing so, they have harmed not only Kentucky Speedway but also all stock car racing fans.” STATE With the beginning of its new fiscal year on July 1, the Kentucky Lottery Corporation (KLC) is now dedicating 100 percent of its proceeds to college grant and scholarship programs and adult and child literacy programs. Fifty-five percent of lottery revenue will fund the need-based Kentucky Tuition Grant (KTG) and College Access Program (CAP) grants, while the remaining 45 percent will go toward the merit-based scholarship program. Kentucky’s “Read To Achieve” program and the Collaborative Center for Literacy Development receive a total of $3 million a year, with a total of $18 million going to these programs since inception. This contribution will continue, with the $3 million coming off the top of lottery proceeds and the remainder going for the scholarship and grant programs. Schedule of Distribution of Lottery Dividends All unclaimed Kentucky Lottery prize money – estimated to be approximately $8 million per year – will go into the KEES Reserve Fund to help maintain the financial stability of the organization. COVINGTON Ashland Inc. has completed its previously announced agreement with Marathon Oil Corporation to transfer Ashland’s 38 percent interest in Marathon Ashland Petroleum LLC and two other businesses to Marathon Oil Corporation in a transaction valued at approximately $3.7 billion. The two other businesses are Ashland’s maleic anhydride business and 60 Valvoline Instant Oil Change centers in Michigan and northwest Ohio. “We are entering an exciting new era for Ashland,” said James J. O’Brien, Ashland’s chairman and chief executive officer. “Our wholly-owned businesses are well positioned in markets having significant opportunities for continued growth. As such, we will focus first and foremost on organic growth. When acquisitions provide the opportunity to strengthen our core businesses and to deliver economic value to our shareholders, we will carefully consider them.” STATE Gordon Food Services (GFS) is consolidating the operations of its distribution centers in East Bernstadt, Kentucky and Martin, Tennessee into a new state-of-the-art facility that is slated to open in February. Closing the distribution center in East Bernstadt will result in the loss of approximately 180 jobs. Both the Kentucky and Tennessee facilities are expected to close in April, 2006. However, the Louisville facility will open with 200 positions and company officials say they expect that number to increase as operations ramp up. “After a thorough analysis of our distribution network, we have determined that consolidating our distribution centers is the best way to serve our customers in the region as efficiently and effectively as possible,” said Rich Wolowski, general manager of Gordon Food Service – ID Division. “We regret the impact this change will have on our employees at the affected distribution centers, their families and the communities where they reside.” The company is encouraging displaced employees to apply for positions at the new facility and other Gordon Food Service distribution centers. Employees who do not secure positions at other Gordon Food Service facilities and commit to staying through the required employment dates will be offered a severance package to assist them in their efforts to secure other employment opportunities. Community leaders in East Bernstadt are hopeful that the losses will be offset by the fact that a number of area businesses – among them ABC Group, a Canadian automotive company - are currently hiring. OWENSBORO Southern Star Central Gas Pipeline has been sold by its parent company, AIG Highstar Capital, for $362 million to GE Commercial Finance Energy Financial Services and Caisse de dépôt et placement du Québec, Canada’s largest institutional investor. Owensboro-based Southern Star is a regulated interstate natural gas pipeline spanning more than 6,000 miles in Kansas, Oklahoma, Missouri, Wyoming, Nebraska, Colorado and Texas. “Our acquisition of Southern Star nearly doubles our pipeline assets, reinforces our infrastructure growth strategy,” said Dan Castagnola, managing director at GE Commercial Finance Energy Financial Services. “Southern Star’s competitive position in the US gas market, along with its stable earnings and cash flows, make it a valuable addition to our portfolio.” Southern Star’s management will continue to operate and maintain the pipeline from its Owensboro headquarters. The company employs some 140 people in Owensboro, with a payroll in excess of $9 million per year. The sale of Southern Star is the second time in three years that the company has changed hands. AIG Highstar purchased the company (then called Williams Gas Central Pipeline) from The Williams Companies in 2002. STATE
“This is a wonderful opportunity for Kentucky’s small and mid-sized companies interested in establishing or increasing exporting markets to South America,” Gov. Ernie Fletcher said. “There is enormous potential for Kentucky products and services internationally. This trade mission will help foster relationships between Kentucky companies and potential buyers, ultimately creating more opportunities for our workforce.” Officials from the Cabinet for Economic Development will lead the delegation on October 9-14, 2005. The objective of the trip is to introduce Kentucky companies interested in doing business in Chile with potential business partners. Business delegates will have the opportunity to meet with pre-screened companies and other potential buyers. Participants will also have the option to attend Expo Retail 2005, one of Latin America’s premier retail events. The Expo reaches more than 22,000 professional and technical people in the food, beverage, hotel and restaurant sector. Companies interested in learning more about how their business can take part in the trade mission are encouraged to contact the Cabinet for Economic Development’s International Trade Division at 800-626-2930 or email Stephanie.Wheeler@ky.gov. LOUISVILLE Louisville-based Humana Inc., Kentucky’s largest publicly traded company, has announced plans to expand its operations in Louisville and Northern Kentucky, creating a total of 1,113 new jobs. The combined $5.7 million investment will be spread out over four locations, including the company’s headquarters in downtown Louisville. The company is considering property on Bishop Lane and other sites in downtown Louisville for two other parts of the expansion. Newport has been selected as the fourth expansion location. In June, Humana announced plans to increase its Medicare operations from 25 states to 46 states in 2006. Many of the new positions the company is creating in Louisville relate specifically to the Medicare expansion plans. In fact, the company has said it hopes to fill some of the new positions with people who are eligible for Medicare, as those individuals “bring experiences that make them uniquely qualified to serve the company’s Medicare members.” The new positions will primarily be in customer service, information technology and sales and support roles, as well as in the company’s clinical and human resources areas. Humana ranks as one of the nation’s largest publicly traded health benefits companies, with approximately seven million medical members. The company has also announced plans to expand its product offering to include a health savings account (HSA) for all commercial groups. An HSA is a tax-free savings account coupled with a high deductible health plan used to pay for health care expenses. The member and the employer can contribute to the interest-bearing account and any unused funds roll over to the next year. Since an HSA is portable, employees can take it with them when they leave a company. HSA members can access their funds by utilizing a special HSA Visa debit card when paying for qualified medical services at their physician’s office or pharmacy. Several groups of mutual funds will be available for the investment portion of HSA accounts. Humana will provide HSA members with electronic and telephonic access to check HSA account balances, request reimbursements and other related services. LOUISVILLE
By building the proposed structure downtown, as opposed to on the University of Louisville campus or another site, visitors would have easy access to hotels, restaurants and entertainment spots. NCAA representatives also said the facility should be able to hold 25,000 people, but designed with enough flexibility that it could be set up for smaller crowds and a more intimate setting. Gov. Ernie Fletcher appointed a task force committee in April to help determine where a new arena would be best suited, what features it should possess and who should operate it. The committee is expected to present it recommendations by October 1. A consulting firm has been retained to assist with the process and is to have its report ready for the task force next month. LOUISVILLE NHK Spring Co. Ltd. has announced plans to invest $20 million to develop a new facility in Louisville’s Jefferson Riverport. The company plans to build a 94,000-sq.-ft. facility, where it will produce small engine springs for the automotive industry. The plant will employ approximately 80 people and is expected to operational by December 2006. NHK President Kenji Sasaki said the company selected Louisville due to its accessibility to customers, the facility’s location in a suburb of a major city and the availability of highly skilled engineers and technicians. Headquartered in Yokohama, Japan, NHK Spring Co. Ltd. is the world’s largest spring manufacturer, employing more than 14,000 people worldwide. The company currently has two subsidiary operations in the commonwealth and employs more than 350 Kentuckians. NASCO in Bowling Green produces over 10 million coil springs and 2.5 million stabilizer links and torsion bars annually. New Mather Metals in Franklin produces stabilizer bars for the North American OEM automotive manufacturers. LOUISVILLE
Minnesota-based Department 56 is a designer, distributor and retailer of giftware products. Brown-Forman Corporation is a diversified producer and marketer of consumer products ranging from champagne to luggage. Lenox, which was purchased by Brown-Forman in 1983, manufactures and markets leading brands in a number of product categories, including Lenox china and crystal; Dansk contemporary tableware and giftware; Gorham silver, crystal and china; and Kirk Stieff silver and pewter products. Brown-Forman Chairman and CEO Owsley Brown II announced earlier this year that the company was exploring a number of alternatives for the Lenox business unit. The company ultimately undertook a competitive bidding process that attracted broad-based interest from both financial and strategic buyers. “The environment for this business has been challenging for several years as evidenced by the weakness throughout the U.S. tabletop and giftware industry,” Brown said. “We believe Department 56 is very well positioned to focus exclusively on and grow this outstanding portfolio of brands.” Brown noted that the sale of Lenox will enable Brown-Forman to concentrate its energies on its global beverage alcohol business. LEXINGTON With second-quarter profits dropping off sharply due to a diminished consumer market and tax charges, Lexmark International has announced that it is eliminating 275 jobs. The majority of the cuts will come from the company’s Lexington headquarters, where it employs approximately 4,000 people. Lexmark officials say the company will offer a voluntary separation program, which includes early retirement benefits, severance pay, an extension of medical insurance and career assistance benefits. LEXINGTON The Kentucky Science and Technology Corporation has established a new program to help the state’s young technology companies gain access to and advice from top business professionals. The effort is part of the knowledge-based economy partnership between KSTC, the Kentucky Council on Post-Secondary Education and the Department for Commercialization and Innovation in the Kentucky Cabinet for Economic Development and the Kentucky Innovation and Commercialization Centers. Experienced business professionals and entrepreneurs who are interested in participating in the program are encouraged to contact Kris Kimel, president of Kentucky Science and Technology Corp. at kkimel@kstc.org, or (859) 233-3502 ext. 223. Individuals who reside outside Kentucky but have connections with the commonwealth will also be considered for the professional pool. The Kentucky Science and Technology Corp. is a Lexington-based non-profit organization that focuses on the advancement of science, technology and innovative economic development. To date, the organization has made more than 150 investments totaling over $8 million in promising young companies. LEXINGTON
The sale begins on Monday, Sept. 12, and continues through Monday, Sept. 26 with no sale on Friday, Sept. 16. Sessions begin at 10 a.m. daily. The total number of horses – 2,668 colts, 2,440 fillies and two geldings – is 219 more horses than the previous record 4,891 cataloged for last year’s auction. “The September Yearling Sale continues to gain in popularity because buyers can find depth in all price ranges,” Keeneland director of sales Geoffrey Russell said. “The record number of horses this year can be attributed to the ever-expanding number of horses in the middle market.” Gross sales totaled an industry record $324,904,300 during last year’s September Sale. The average – $96,411 – and median – $37,000 – were records for the sale. Top price last year was $8 million paid by Hideyuki Mori for a colt by Storm Cat out of Welcome Surprise. Lane’s End, as agent, sold the colt. The September Yearling Sale will be the first auction held in Keeneland’s newly remodeled sales pavilion. LEXINGTON Aramark Uniforms and Career Apparel, Inc. (AUCA) has announced plans to expand its Lexington headquarter operations as part of a plan to centralize a portion of its business. The expansion is expected to result in the creation of more than 100 new jobs in the region. The company specializes in uniforms and work wear for a variety of industries. AUCA’s divisions include Aramark Uniform Services, WearGuard-Crest and Galls. AUCA’s parent company, Aramark Corporation, is ranked No. 1 in its industry in the 2005 FORTUNE 500 survey and was also named one of the nation’s “Most Admired Companies” by FORTUNE for 2005. It has consistently ranked as one of the top three most admired companies in its industry as evaluated by peers since 1998. Headquartered in Philadelphia, Aramark Corporation has approximately 242,500 employees serving clients in 20 countries. LEXINGTON Secat, Inc., a Lexington metallurgical research firm, has been selected by the U.S. Department of Energy to serve as the project manager for a $3 million contract. The goal of the project is to reduce the cost of hydrogen pipelines by 20 to 40 percent by 2007. The costs currently stand at some $1.4 million per mile. The project has been identified as a significant part of the nation’s efforts to address the country’s growing energy needs. The contract is part of the DOE’s investment in research to employ hydrogen (which, like electricity, is an energy carrier) that can be produced from diverse, domestic sources, thereby reducing the nation’s dependence on imported oil. Pipeline transmission is the most economical way to deliver hydrogen, but one of the limiting factors is the embrittlement that occurs in the pipeline steels currently used. To address this problem, Secat will head a research team charged with developing barrier coatings to protect existing pipelines and new alloys for pipelines that can resist hydrogen embrittlement. The research team includes Oak Ridge National Laboratory, the University of Kentucky, the University of Illinois, ASME International, Columbia Gas, and several businesses with expertise in specialized coatings and pipeline networks. LEXINGTON
A new shuttle service between Lexington’s Blue Grass Airport and communities in central and eastern Kentucky has started, eliminating the need for travelers to pay high taxi and/or parking fees. The Kentucky Sky Shuttle is currently transporting people to Blue Grass Airport from Somerset, Stanford and Danville and plans to add Nicholasville to that list in the coming weeks. Fares are set at $40 one-way/$75 round-trip from Somerset and $35 one-way/$65 round-trip from Stanford or Danville. Discounted fares are offered for families, senior citizens and those on active military duty. For an additional $5, customers can purchase a sandwich from Penn Station. The service utilizes a 12-passenger van that has been reconfigured to accommodate nine people, providing more interior space and a more comfortable ride. In addition to receiving special training, drivers undergo background checks and receive random drug and alcohol testing. More information and reservations for the shuttle service are available by calling (606) 669-2020 or (606) 379-0111, or by visiting http://kyshuttle.com. TENNESSEE
The acquisition adds 123 retail stores in 21 states to Clayton’s existing 392 stores. Clayton has seen significant growth since being acquired by Berkshire Hathaway in 2003. Last year, Clayton acquired Oakwood Homes, resulting in the addition of 86 stores. More recently, the company announced that it is buying Karsten Homes, a U.S. builder that has divisions in California, Oregon, New Mexico and Texas. The acquisition of Fleetwood, a Fortune 1,000 company based in southern California, further increases Clayton’s presence in the West Coast markets of California, Washington and Oregon as well as in Mississippi, Virginia and West Virginia. As part of the Fleetwood agreement, Vanderbilt Mortgage, an affiliate of Clayton Homes, is purchasing the retail loan portfolio of HomeOne Credit Corp., Fleetwood’s manufactured housing finance company. The transaction is valued at approximately $71 million. INDIANA The City of Evansville has extended its lease with Casino Aztar through 2010, a move that will enable Casino Aztar to invest $40 million and develop a seven-acre downtown entertainment district on the casino’s waterfront property that will create more than 300 full-time positions with average earnings of $32,500. The downtown entertainment district project will include an upscale 100-room boutique hotel, ultra-lounge and a multi-venue entertainment complex that will contain Jillian’s Billiard Club, Ri Ra Irish Pub & Restaurant and two additional venues to be announced at a later date. The hotel and leisure attractions will be configured around a new riverfront park. Groundbreaking for the downtown entertainment district project is expected to occur next month. The entertainment pavilion, park and associated infrastructure are expected to be complete in June of 2006, with the hotel slated to open in September of 2006.
Business Briefs BOWLING GREEN
COVINGTON
FLORENCE
FRANKFORT
FRANKLIN
HENDERSON COUNTY
KNOTT COUNTY
OWENSBORO
RICHMOND
STATE
LOUISVILLE
LEXINGTON
INDIANA
OHIO
TENNESSEE
WEST VIRGINIA
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is copyright 2005, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
Maryland-based NeighborCare is one of Omnicare’s primary competitors, with both companies specializing in pharmaceutical services for the elderly. Omnicare’s first efforts to acquire NeighborCare began over a year ago and were twice rejected before Neighborcare finally accepted an offer of $34.75 per share.
Master: Bill Samuels, Jr., president, Maker’s Mark Distillery, Inc., Louisville
“One of the most consistent questions asked around this state for years has been, ‘Just where is all that Kentucky Lottery money going?’” said KLC President and CEO Arch Gleason. “We’re prohibited by law from advertising where our proceeds are spent. However, now that we’re at the point where 100 percent of our proceeds are going to fund college grants and scholarships, I believe people will better understand where the money goes based on how many lives we will touch.” 
Ashland will now operate as two sectors – Chemical and Transportation Construction. The Chemical Sector provides product and service solutions in adhesives; composite polymers; metal casting solutions; water treatment; Valvoline® premium motor oil and car care products; and chemicals and plastics distribution. The Transportation Construction Sector, commercially known as Ashland Paving And Construction, Inc., is one of the nation’s largest transportation construction contractors, doing business in 14 southern and midwestern states.
Kentucky companies are being encouraged to participate in a business development trade mission to Santiago, Chile, as part of the state’s “Export Kentucky” initiative.
The new jobs will have an annual payroll of more than $55 million.
Officials with the National Collegiate Athletic Association (NCAA) have told members of the Louisville Arena Task Force that a downtown site is the best location for a new arena if the city wants to be able to attract future NCAA tournaments. 
Brown-Forman Corporation has announced plans to sell one of its subsidiaries, Lenox, to Department 56 for $190 million. 
The company saw its net income for the second quarter drop from $136.6 million in 2004 to $79.9 million this year, a figure that was significantly affected by the company’s $53 million charge for repatriating foreign profits under the American Jobs Creation Act. Minus that expenditure, Lexmark’s earnings would have been more in line with the rosier financial estimates expected by industry analysts. 
The new Executive-in-Residence program will develop a pool of experienced business professionals and entrepreneurs from across Kentucky and the nation to help fill the business talent gap that often challenges new and growing technology-driven companies. These professionals will be strategically placed with entrepreneurial Kentucky companies as they proceed through the growth cycle. 
Sales officials have announced that Keeneland will catalog a record 5,110 horses for its annual September Yearling Sale. 
The new Kentucky Sky Shuttle service to and from Blue Grass Airport eliminates the need for travelers to leave their cars there while they are away. 
Clayton Homes, a Knoxville company that ranks as the nation’s largest retailer of manufactured housing, is acquiring the majority of assets of its competitor, Fleetwood Retail Corp., for $74 million. 
Farmers Capital Bank Corp. has purchased Newport-based Citizens Bancorp Inc. for $38 million. Citizens is the parent company of Citizens Bank of Northern Kentucky Inc. The company has $185 million in assets and six banking offices in Campbell and Kenton counties. Farmers has $1.4 billion in assets and operates 27 banking locations in 16 communities throughout Kentucky as well as a mortgage company, a leasing company, a data processing company and an insurance company. 
Exstream Software, Inc. has opened a new office in Munich, Germany. Among Exstream’s products is its signature software, Dialogue, that enables companies to personalize a wide range of communications. The company’s new location is the Lexington-based firm’s sixth international location and its fifth direct sales and service center in Europe. 
Alcoa is investing approximately $330 million at its Warrick Power Plant in Newburgh, Indiana, to increase environmental performance, increase power efficiency, lower costs and further secure long-term, low-cost power for its smelter and related downstream business there. Plans include installation of scrubbers on all four operating units, boiler modifications to provide greater fuel flexibility, and the installation of new and improved coal handling facilities for increased efficiency.