Welcome to the July 25 Monday Business Briefing, your private business intelligence digest from Insider Louisville.

Revelry Boutique Gallery to sell remaining WHY Louisville shirts; proceeds will go to mental health nonprofit

The WHY Louisville shirts have been unearthed. | Photo by Soozie Eastman
The WHY Louisville shirts have been unearthed. | Photo by Soozie Eastman

We finally know what happened to the remaining WHY Louisville T-shirts. The defunct retail store‘s NuLu neighbor and friend, Revelry Boutique Gallery, purchased the lot of about 2,000 Louisville-centric shirts at an auction last week.

Gallery owner Mo McKnight Howe tells Insider that since the two stores closed last winter, many people come into her shop and ask about the famous shirts, and she was happy to purchase the remaining items.

“We bought posters, prints and shirts designed by many local artists (J.J. Haws, Jason Pierce, Miss Happy Pink and more),” she says. “We basically bought all the T-shirts we could. We have over 2,000 of the classic WHY Louisville favorites.”

Some of the shirts are currently for sale now, and most of them will be up for grabs for $10 at the NuLu Summer Block Party on Saturday, July 30.

Howe says a portion of every T-shirt sold will be donated to Mental Health America of Kentucky, a local organization that seeks to improve the care and treatment of people with a mental illness.

As Insider reported in November, WHY Louisville owner Will Russell closed the stores after a series of personal issues. —Sara Havens

Aetna/Humana and feds far apart on what could save proposed merger

Humana HQAetna, Humana and antitrust regulators are far apart in their discussions about what needs to happen to allow the insurance giants’ merger to proceed.

Filings with the Securities and Exchange Commission and statements from all parties hint at a protracted court battle.

Health insurance giant Aetna, based in Hartford, Conn., wants to buy Louisville-based Humana for $37 billion. The companies said that combined, they can offer better health care to more people at a lower price than they can separately.

Antitrust regulators, who for months had been investigating the proposed merger’s impact on competition, disagree. The U.S. Department of Justice on Thursday filed a lawsuit to block the deal, saying it would materially reduce competition, lead to higher prices and lower quality care, especially for seniors. The DoJ at the same time also filed a suit to block Anthem’s proposed acquisition of rival Cigna.

Aetna has offered to sell billions of dollars in assets to eliminate the regulators’ concerns about its merger with Humana. But William Baer, the DoJ’s principal deputy associate attorney general, said in a press conference Thursday that the proposed remedies are “incomplete and impractical” and “totally unlikely to solve the competitive problems we have identified.”

“These are so-called solutions we cannot accept,” he said.

In the Q&A session that followed the DoJ’s presentation, Baer suggested the problems were insurmountable.

“There are some mergers which can be solved through divestitures,” he said. “We’ve seen nothing to suggest that these can.”

Baer said the DoJ determines whether consumers, after a divestiture, will benefit from the same degree of competition that exists before the deal.

“We have zero confidence the proposals that have been made to us come close to meeting that standard,” he said.

When an audience member asked whether the companies could do something to address the government’s concern and to get a settlement, Bear remained doubtful.

“We have seen nothing that suggests that,” he said. “Absolutely nothing.”

Ethan Glass
Ethan Glass

Ethan Glass, a former DoJ assistant chief, told IL he would be surprised if the statements from Baer constituted saber rattling.

In private litigation, making public statements to put the other side under pressure is a common practice. Parties often say they “will never settle” a case to elicit a better offer from the opposition, only to settle the case a short while later.

However, Glass said that when officials with the DoJ make public statements, they do so to provide transparency into their thinking — not for leverage.

“If they’re saying something publicly, they’re shooting straight,” he said.

Glass worked at the DoJ until May. Louisvillians may be familiar with his work: Last winter he handled the government’s case against Swedish appliance maker Electrolux, which was trying to buy General Electric’s Louisville-based appliances division. Glass now handles antitrust cases for Washington, D.C., law firm Quinn Emanuel.

DoJ leaders and representatives from Aetna and Humana emphasized they remain open to discussing potential remedies.

“We’re always willing to engage in discussions,” said Attorney General Loretta Lynch in the conference.

“We’re willing to speak to them anytime,” Humana spokesman Tom Noland told IL.

Aetna spokeswoman Kristine Grow told IL the companies believe the government is misreading the robust competition in the health insurance industry.

“We’re focusing on presenting the facts in court,” she said.

Meanwhile, Humana filed documents with the SEC last week to inform investors that it expects a higher-than-previously-expected profit this year. Near the end of the filing, the company said it was no longer certain when its proposed merger with Aetna would be completed. Aetna and Humana have said for months they expect their marriage to be consummated in the second half of this year.

“Given the uncertainty associated with the timing and outcome of litigation, the company cannot predict the timing of when the transaction may close,” Humana said Thursday. —Boris Ladwig

On a positive note, Humana military business will double

Humana is gaining nearly 3 million new military customers. | Courtesy of Humana.
Humana is gaining nearly 3 million new military customers. | Courtesy of Humana.

Humana has landed a big government contract that will double the number of its military customers to about 6 million.

The U.S. Department of Defense has awarded Humana the contract for the TRICARE East Region, the Louisville-based insurer said in a press release July 21 after markets closed.

TRICARE provides health insurance to military personnel, veterans and their families.

Under the new contract, Humana would cover about 6 million customers in 30 states. Previously, the company provided TRICARE for about 3.1 million customers in 11 states, including the Ft. Campbell area in Kentucky.

In its most recent quarterly report, Humana said its military business generated about 1 percent of its health care premium and services revenues, or about $137 million.

“We take deep pride in serving those who have served our nation, so we are very pleased by the DoD’s decision,” said Orie Mullen, president of Humana Government Business, in the press release. “This is a tremendous opportunity for us, and we look forward to providing great access to high-quality, innovative and cost-effective health and well-being services to active military members, retirees and their families.”

Humana said the contract, as customary, provides five one-year options exercisable by the government. The company won its current contract in 2011.  —Boris Ladwig

Brown-Forman targets Spain for growth

Spain mapBrown-Forman Corp. is targeting Spain as its next European growth market. The Louisville-based distiller plans to establish its own distribution organization on the Iberian peninsula in summer 2017.

Spain would become the 15th international market, and seventh in Europe, where the company owns or directly manages its distribution. Brown-Forman’s current distribution agreement in Spain, with Importaciones Y Exportaciones Varma S.A., will end next summer.

In markets where the company owns its distribution, it sells products directly to wholesalers and retail stores. In other markets, Brown-Forman reaches fixed-term contracts with other distributors.

International markets have played an increasingly important role for the Louisville distiller. In fiscal 2015, it generated 54 percent of its net sales outside of the U.S., up from 41 percent a decade earlier.

Europe accounted for about 32 percent of total net sales in 2016, with the United Kingdom contributing 10 percent and Germany 5 percent. No other country had a share greater than 3 percent.

“Spain is the world’s ninth-largest whiskey market and the third-largest whiskey market in Europe. We believe there is significant potential for Jack Daniel’s and our other whiskey brands in Spain,” said Thomas Hinrichs, the company’s president for Europe and Asia, in a press release.

“Establishing our own distribution organization in Spain will support the development of the Jack Daniel’s trademark as well as our broader portfolio in this dynamic market where premium spirits are growing,” he said. —Boris Ladwig

And in other B-F news, the company was lauded for disability inclusion practices 

Brown-Forman logoSpeaking of Brown-Forman: Congratulations are in order as the company was named among the best places to work for people with disabilities.

The American Association of People with Disabilities recently released its second annual Disability Equality Index, and the Louisville distiller was among 42 companies that received a score of 100 percent, which indicates the employers adhere to “many of the numerous leading disability inclusion practices featured in the DEI.”

Results are based on a survey that measures areas including culture, leadership, enterprise-wide access, benefits, accommodations and community engagement. The AAPD invites participation from companies on the Fortune 1000 and businesses/organizations that have at least 3,000 full-time employees in the United States.

Kathi Stearman, Brown-Forman’s EEO compliance officer, said the company was proud to be recognized.

“The DEI survey helps us identify strengths and areas of opportunities throughout the organization, helping us improve our disability inclusion policies and practices,” she said. “We believe that welcoming and engaging the talents of individuals with disabilities is a critical part of our efforts to build an inclusive workforce.”

Other companies with a 100 percent score include DuPont and insurers Aetna, Anthem and Cigna. Humana was not included. The company could not immediately say whether it participated in the survey, but it announced last year an ongoing commitment to recruit, hire and retain veterans and people with disabilities. Humana said that since 2011, it has hired about 2,400 veterans and military spouses.

UPS was among companies that got a DEI score of 80 percent. —Boris Ladwig

UofL makes top 100 list for U.S. patents

With 25 utility patents granted in 2015, the University of Louisville has cracked the top 100 list of universities in a new worldwide ranking.

UofL ranked No. 97 in the list for utility patents granted by the U.S. Patent and Trademark Office in the 2015 fiscal year, which was published by the National Academy of Inventors and Intellectual Property Owners Association.

“Belonging to this elite list is yet another affirmation that UofL has made great strides in the innovation arena in the last several years,” said Eugene Krentsel, UofL’s associate vice president for research and innovation, in a press release.

UofL also made the top 100 list in 2014 with 25 patents, after not being ranked in the previous two years. —Joe Sonka

Space Tango payload arrives at International Space Station

Kibo module
Kibo Module | Courtesy Space Tango

Sure, they’re a Lexington, not Louisville, firm, but when it’s cool news like this, we’ll make an exception. Last week, the SpaceX Dragon capsule berthed with the International Space Station loaded with payloads sponsored by the ISS U.S. National Laboratory, including one from Space Tango.

Their contribution was a MultiLab facility that will be permanently installed on the ISS and will serve “as a multi-user, general-purpose research platform for conducting research in microgravity,” according to a news release. The technology reduces the cost and time for academics designing experiments and will enable more access to space for research and education.

Space Tango’s CEO Twyman Clements helped develop the research platform.

This was the ninth launch of SpaceX. The Kibo module (otherwise known as the Japanese Module) of the ISS will be home to the MultiLab. –Melissa Chipman

Venture Connectors release new video commercial

Lesa Seibert, CEO of Mightily; Zack Pennington, CEO of U.S. Chia; Greg Langdon, private investor; and Allu Truttman, CEO of Wicked Sheets star in a new commercial for Venture Connectors. In it, they tout the monthly luncheons and the annual Venture Sharks competition.

Venture Connectors is nonprofit organization originally formed in 1995. It brings entrepreneurs, investors and service providers together to help build a stronger business community and continuously improve investments in Louisville. —Melissa Chipman

Parklands of Floyds Fork has a comedian for an intern this year

One of the joys of this summer has been watching the Parklands of Floyds Fork put their hilarious intern to work creating PSAs for the park. His deadpan delivery and pop culture references are priceless.

Whoever uploaded the first video commented, “Watch as our summer intern attempts to teach you how to respect the Parklands of Floyds Fork. We’re not sure what’s wrong with him either.”

The second video opens with the young man reading a book called “How to Follow Your Confusingly Successful Littering Video.” He did so admirably.

I don’t know what his deal is, but he’s welcome to intern at Insider any time. –Melissa Chipman

 

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