Bemis Healthcare Packaging is taking steps to close its Perfecseal plant at 9800 Bustleton Ave. in Northeast Philadelphia, according to some of the 200 workers there. Bemis is shutting down functions and shipping Philadelphia equipment to Bemis plants in Wisconsin, where Gov. Scott Walker, who is running for U.S. President, has given the company $2 million in grants and subsidized loans, toward a $25 million factory update to add 160 Wisconsin jobs. I'm waiting to hear more from Bemis. Gov. Walker's office did not immediately respond to emailed questions.
"This company has been in Philadelphia for over 60 years," and Bemis, based in Neenah, Wisc., has owned the Bustleton works since buying Perfecseal from the Frank O'Neil family in 1986, said Robert Doughtery, who has worked at the plant for 26 years. Dougherty says the company has agreed to pay him eight weeks of severance "if I stay til the end."
"It's a shame," says David Gaudioso, lawyer for Teamsters Local 169, one of two unions at the factory, which makes film coverings to package sterile medical equipment. He said the union has been told Dec. 31 is a target closing date, but some departments could keep running into next year. The union's contract is valid until May 2017, so if the plant reopens the company has to call current workers back under current terms.
"Every insurer" is thinking about mergers and acquisitions now, after three recent blockbuster merger proposals, says analyst Paul Newsome, in a report to clients of New York brokerage Sandler O'Neill + Partners:
- Ace Ltd. (Switzerland) plans to spend $28 billion for Chubb (Warren, N.J.) Global property insurer Ace's biggest employment center, with 2,500 workers, is the Philadelphia area, but the North American operations based here are being combined with Chubb's, as Ace plans to cut $650 million in yearly expenses to help make the deal pay.
- Willis Group (Ireland/U.K.), the insurance brokerage giant (Chicago's ex-Sears Tower is its US HQ), has agreed to pay $18 billion for business consultants Towers Watson (Arlington, Va.), which employs 1,000 in Philadelphia and Mount Laurel. Oddly, Willis is paying less than Towers Watson's market value. Willis plans to cut $100 million to $125 million in expenses.
- Tokio Marine (Japan), which owns Philadelphia Insurance Cos., Bala Cynwyd, agreed to pay $7.5 billion for HCC Insurance Holdings Inc., Houston.
What's up? Slow growth is pushing ambitious CEOs to acquire; the Fed's cheap-money policy makes deals easy to finance, while it lasts; and "the tax rate of the surviving company is an important consideration," writes Newsome.
"Farewell and Thank You," says the website of Star Group, the Voorhees-based national marketing and communications firm run by Jan Talamo, Linda Rosanio and partners (revised). "By advice of counsel, we can only share that due to a situation beyond our control and after 30 years, Star Communications was forced to close down... Looking forward to the next round." Senior people have left and practice groups are joining other firms.
Star claimed 170 employees as recently as last year, had offices in Philadelphia, New York and Las Vegas, and has counted Comcast, Teva Pharma, Penn's Wharton School and Tropicana casinos as clients, says the Philadelphia Business Journal here. PBJ called Star "the largest woman-owned marketing and communications firm in the country."
Delaware River Port Authority board member Eugene DePasquale, Pennsylvania's elected Auditor General, says he and at least some other DRPA board members will vote at DRPA's July 15 board meeting to cut tolls for daily bridge users to $4, from the current $5, to help working commuters.
"DRPA is on sound financial footing to do this," DePasquale spokeswoman Susan Woods told me. The auditor general will put out budget projections at the hearing.
DRPA operates the Ben Franklin, Walt Whitman, Betsy Ross and Commodore Barry bridges connecting Pennsylvania and New Jersey. The authority also operates PATCO South Jersey suburban trains, which have suffered from poor maintenance over the years as the board, made up of political appointees from Pennsylvania and New Jersey, gave away millions in tolls to "economic development" projects.
The Pennsylvania Industrial Development Authority has agreed to lend $1.2 million, at subsidized interest rates, so Bucks County Economic Development Corp. can help Jadeite Foods LLC build a new $4.55 million tofu factory in Bensalem that will enable the company "to produce higher volumes of tofu products than any other U.S. company east of the Mississippi," the state Department of Community and Economic Development promises, while creating 24 jobs. The claim that Jadeite could become the biggest eastern U.S. tofu-maker "was pulled from Jadeite's loan application," state spokesman Dan Carrigan told me.
The deal includes an $800,000, 15-year, 2.25% loan to help buy the facility, and a $400,000, 7-year, 3% loan for tofu machinery and equipment. "The company will market its products mainly to Chinese supermarkets and restraint distribution centers," DCED adds." We hope they mean "restaurant," since our limited imaginations don't understand tofu's use as a restraint; unless maybe metaphorically... Jadeite has a smaller factory five miles away.
PIDA also plans to lend $400,000, for 15 years, at 3 percent, so Shades of Green, Inc. can buy a 110,000 sf Falls Township building "to expand its growing green recycling operation and accept more green waste, which is processed into mulch." Shades has a smaller site five miles away. The move will cost $3.25 million in all and add 2 new jobs to 9 current positions.
Ace Ltd., the Zurich- and New York-based global property-insurance giant, says it will pay $28 billion, or $124.13 a share in cash and stock, for Chubb, the Warren, N.J.-based insurance group. Ace boss Evan Greenberg will be chairman and CEO of the combined company. Greenberg said the deal will be profitable from the beginning, as the companies cut $650 million of "overlap" expenses, out of roughly $4 billion in yearly operating expenses; they also hope to boost sales. Both stocks rose in early New York Stock Exchange trading.
"Ace will continue to maintain a significant presence in Philadelphia," home to the company's company's U.S. property and casualty business; but "a substantial portion of the headquarters function" for the U.S. and Canada will be combined at Chubb's office complex in Warren, Somerset County, west of New York City, the companies said in the statement. Ace also owns the former INA golf course and conference center near Lafayette Hill. The company employed around 2,200 in the Philadelphia area as of 2010.
Chubb boss John Finnegan will get the title "Executive Vice Chariman for External Affairs of North America" and hang around to help with the merger, which will presumably include laying off duplicate headquarters staff. Finnegan also stands to collect more than $90 million in stock and severance.
Wendel, a family-owned, Paris-based investment firm, says it has agreed to pay Blackstone Group $670 million in cash for 96 percent of AlliedBarton Security Services, the Conshohocken-based outsourcing giant. AlliedBarton employs around 55,000 guards and other workers (6,000 around Philadelphia). Many are members of the Service Employees International Union. They work at 200 of the Fortune 500 corporations, and 3,000+ other landlords and tenants. (Wendel is also 11.7% owner of Saint-Gobain, the French building-products maker whose U.S. headquarters is near Malvern. Earlier versions of this item wrongly said Wendel was 'the owner'.)
Wendel also agreed to take over $990 million in AlliedBarton debt, Wendel spokeswoman Caroline Decaux told me, boosting the total consideration to $1.67 billion. Blackstone paid $750 million all-cash for AlliedBarton in 2008. As owner, Blackstone "benefited from the run-up in profitability," as well as the "significant turnaround in the capital markets" that allowed AlliedBarton to borrow and expand, Andy Greenberg, principal at Fairmount Capital Partners and GF Data Resources, told me. AlliedBarton managers, led by chairman and CEO Bill Whitmore, will control the other 4 percent of shares.
AlliedBarton says sales totalled $2.18 billion last year. Clients include 200 of the Fortune 500 and more than 3,000 other landlords and tenants. Earnings (before interest, tax, depreciation/amortization) were $148 million. Wendel says its price is 11.6X AlliedBarton's free cash flow. The deal is expected to close at year's end.
A "failure to address" the long-term money shortage in one-third of Pennsylvania's 3,240 local-government pension plans threatens to "dramatically impact the quality of life" in some cities and townships and could force communities into bankruptcy, Auditor General Eugene DePasquale and other members of Gov Wolf's Task Force on Municipal pensions warned in this report. (Revised)
While it doesn't go as far as Republican bills pending before both houses, it's a start, lobbyist Christian Muniz, who represents business and local-government groups that want new hires given savings plans instead of guaranteed pensions, told me. "Great start," added David M. Sanko, executive director of the Pennsylvania State Association of Township Supervisors. "Time for action."
The state, the task force said, should:
- Stop underfunded municipal pensions like Philadelphia's from increasing pensions through union collective bargaining.
- Cut state aid to towns that are not paying enough to prevent their plans from becoming more insolvent under a basic funding formula (the Minimum Municipal Obligation). Philadelphia, which has met its target in most years under Mayor Nutter (exception for the worst of the recession), received more than $60 million of state money this year for its "severely" underfunded plan.
- Ban towns from using state aid to pay administrative fees, which state officials have separately estimated cost small-town pensions more than $1,400 per year, per member, four times what big-city plans pay their administrators.