B.R. likely to lose corporate headquarters when Shaw acquisition goes through
While economic development officials scramble to respond to news that The Shaw Group—one of the state's largest public companies and Baton Rouge's only Fortune 500 company—is being acquired by Chicago Bridge & Iron Co., a leading local economist says one thing is certain: "Baton Rouge will not be their central nervous system any longer." LSU economist Jim Richardson says it's too early to tell how the $3.04 billion acquisition will affect the local economy and The Shaw Group's local presence. "But given that CB&I's U.S. operations are based in Houston and "they obviously have a large staff and headquarters there already," it's likely a substantial part of Shaw's corporate operations will move out of state. "A lot of it will depend on the economies of scale, how much overlap there is in what both companies do, how much connection there is between the two of them," Richardson says. "Some of that still has to be determined." Still, Richardson believes the deal will be approved by shareholders and the SEC later this year, since it has already gone this far. The cash and stock acquisition, announced this morning, will create one of the biggest energy infrastructure construction companies in the world, with some 50,000 employees worldwide. Shaw currently employs 27,000 worldwide. CB&I offered $46 per share—$41 in cash and $5 in stock—a premium of 72% to Shaw's closing price on Friday, the companies said. Shaw stock jumped 65% to $44.05 in pre-market trading, while CB&I fell 8.5% to $37.25, according to Reuters. Shaw will continue as a business segment branded as CB&I Shaw. Shaw Chief Executive Officer Jim Bernhard Jr. will leave after the deal closes in early 2013, and CB&I CEO Philip Asherman will lead the combined company. "Does this kill your economy? No, not by itself," Richardson says. "But as a growing city you like to have big companies coming here, not leaving." —Stephanie Riegel
Today's poll question: Do you think the Shaw acquisition will be a blow to the local economy?
Are teachers unions getting in the way of education?
In some parts of the antebellum South, it was illegal to teach blacks how to read. Are teachers unions in Louisiana trying to turn back the clock? queries The Wall Street Journal. Last week, lawyers for the Louisiana Association of Educators, one of the state's two major teachers unions, threatened private and parochial schools with lawsuits if the schools accept students participating in a new school choice initiative that starts this year. Education reforms signed into law in April by Gov. Bobby Jindal include a publicly funded voucher program that allows low-income families to send their children to private or parochial schools. Teachers unions allege that sending public dollars to nonpublic schools violates the state's constitution; they are challenging the law in court. A hearing is set for October, but the unions have already lost several court bids to delay the voucher program until the lawsuit plays out. On Thursday, lawyers representing the unions faxed letters to about 100 of the 119 schools that are participating in the voucher program. "Our clients have directed us to take whatever means necessary," the letter reads. Unless the school agrees to turn away voucher students, "we will have no alternative other than to institute litigation." The letter demanded an answer in writing by the next day. To read more, click here. (Registration may be required.)
Lamar to redeem senior subordinated notes
Lamar Advertising Co., a leading owner and operator of outdoor advertising and logo sign displays, announced today that its wholly owned subsidiary, Lamar Media Corp., intends to redeem in full all $122 million of its 6.625% senior subordinated notes due in 2015. Lamar Media expects to redeem the notes on Aug. 29 at a redemption price equal to 101.104% of the principal amount of outstanding notes, plus accrued and unpaid interest to, but not including, the redemption rate, which will be due and payable on the redemption date upon surrender of the notes. A notice of redemption is being mailed to all registered holders of the notes by The Bank of New York Mellon Trust Company N.A., the trustee of the notes. To read more, click here.
NOPD reputation has suffered for many years
It was over coffee at a north Louisiana diner 34 years ago that a local sheriff's deputy made the observation, "People who are with the police department down there in New Orleans—a lot of them would be in jail if they were up here," says The (Lafayette) Advertiser. Sure, it's an exaggeration, but it shows just how ingrained and widespread the New Orleans Police Department's reputation for scandal was even then. And that was two years before a young officer's murder sparked investigations of abuse as well as deaths that led to indictment of officers known as the "Algiers Seven, 12 years before suspected cop killer Adolph Archie died a messy death in police custody, 16 years before officer Len Davis was exposed as a protector of a cocaine ring who ordered the murder of a woman, and 17 years before Officer Antoinette Frank killed a fellow officer and two others during a restaurant robbery. It was a generation preceding the Danziger Bridge shootings and the discovery of the burned body of Henry Glover amid post-Hurricane Katrina chaos. And those were just the big scandals. Never mind the myriad abuses and incidents of corruption that draw less attention. All of that is why nobody was surprised last year by the U.S. Justice Department report depicting a dysfunctional department replete with race and gender bias, lax enforcement of weak policies, poor training, uneven discipline and excessive use of force. To read more, click here.
Funding cuts hit Huey P. Long Hospital in Pineville
As LSU hospitals today begin implementing reductions in services and program closures, Pineville's Huey P. Long Hospital anticipates a 35% reduction in its acute-care beds program, reports The (Alexandria) Town Talk. LSU officials are negotiating with private hospitals to assume at least some operations in an effort to handle a $329 million cut in funding. Officials laid out a plan Friday that uses one-time funding, defers purchases, eliminates programs, reduces salaries, lays off some employees, and makes roughly $50 million in cuts to balance the hospital system budget. "We don't have the capacity to take out about $330 million and not impact our services without a significant increase in our revenues," says Dr. Fred Cerise, vice president of the LSU System Office of Health Affairs & Medical Education. But since there's no way to significantly increase revenues, some patient impact was necessary. Cerise says physicians agreed to take less money for treating patients, patients would pay a little more than formerly, and a delicate balancing act to secure additional Medicaid funds would be put in place. Revenues produced daily would be submitted to retrieve a federal Medicaid match. To read more, click here.
News roundup: Isom's intentions to kick for LSU up in the air … Whole Foods to donate to Slow Food Baton Rouge … LSU football players report Wednesday
Off the field: Mo Isom, the former star goalkeeper on the LSU women's soccer team, may not be resuming her campaign for a spot on the LSU football team's all-male roster as a field goal kicker. Isom failed to make the team in the spring. Coach Les Miles says he has not heard whether she'll again try out for the 2012 season. To read more about the 6-foot-1 Isom, click here.
Helping gardens grow: Whole Foods Market is donating 5% of Aug. 8 sales to Slow Food Baton Rouge, a nonprofit for a secure and sustainable local food system. SFBR has trained and given support to several youth and community gardens in the area and works to connect growers with chefs and consumers, in addition to creating a local food guide. To read more about Whole Foods' 5% program, click wholefoodsmarket.com.
Calling all campers: The LSU football team reports to campus Wednesday and begins practice Thursday to begin its eighth season under head coach Les Miles. The Tigers are expecting 105 players to attend preseason camp, including 15 starters—six on offense, six on defense, and three on special teams—and 41 "letterwinners" from last year's team that finished 13-1 and won the Southeastern Conference title. LSU Fan Day is Aug. 11, and the team kicks off the season Aug. 27 against North Texas.
Correction: Daily Report AM incorrectly reported today that Gary Graphia was retiring from the Shaw Group Inc. when, in fact, Graphia has already retired. Graphia retired May 1 after 13 years with the Shaw Group. Daily Report regrets the error.
