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Saturday, Jan 28, 2023
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Merger Mania Clobbers Valley

It’s hard from a local perspective to cheer Centene Corp.’s $6.8 billion bid for Health Net Inc., the managed care insurer based in Woodland Hills. Assuming the merger goes forward, there’s more than a good possibility there will be staff cuts at the Warner Center office building where Health Net is headquartered. After all, the mergers sweeping the health care industry are at least partially driven by cutting costs, and redundant management and back-office workers are the low-hanging fruit. And since Health Net is being acquired, it’s a given that the headquarters of the merged firm would be in St. Louis where Centene is located. Hence, the Valley would lose yet another public company, even if the majority of Health Net’s local workers remain. Remember, the acquisition would follow last month’s announcement that home builder Ryland Group Inc. and biotech Kythera Biopharmaceuticals Inc., both in Westlake Village, struck deals to be acquired by Orange County companies. (The Ryland deal is being billed a “merger of equals” but Standard Pacific Corp. shareholders will hold the majority of stock in the combined company.) In the June 29 issue of the paper, our lead story examined the deals involving those two Conejo Valley companies, which have disturbed some folks in west Ventura County. The story pointed out, though, that the area remains dynamic, with up-and-coming companies. For example, it drew single-family home landlord American Homes 4 Rent Inc. from Malibu a few years ago. What’s more, the Health Net deal must be placed in the context of the health insurance industry’s changing economics following implementation of the Affordable Care Act, which last month survived what looks to be its final serious conservative challenge before the Supreme Court. The act both limits insurer profit margins while expanding the market for them, especially in Medicaid, which got a huge boost in funding to bring uninsured poor people into the insurance system. Analysts say Health Net was attractive because of its large Medicaid programs. Of course, the context for all these acquisitions are the continuing rock-bottom interest rates and high stock prices that makes it a great time to make deals on Wall Street. That all being said, it would be nice if there were more local acquisition-minded public companies such as Walt Disney Co. or even Amgen Inc., which despite employee cutbacks has bought a series of companies to expand its drug product pipeline. • • • As editor of the Business Journal, I would be doing my staff a disservice if I didn’t take a little space and celebrate the paper’s recent honors in journalism competitions run by the Alliance of Area Business Publications and the Los Angeles Press Club. The Alliance, a trade group of journals such as ours, held its annual awards dinner on June 27 in Charlotte, N.C. The paper won first place in the design category for smaller circulation business journals and second place for overall excellence. Former reporter Elliot Golan won a first place award for a scoop he had last year about billionaire Alfred Mann selling his business parks in the region. The publication won awards at the L.A. Press Club for two other stories. I would be dishonest if I didn’t admit a smidgeon of disappointment. Last year, the paper was awarded the first place award for general excellence by the Alliance, whose contest is judged by University of Missouri’s Missouri School of Journalism. But first or second, the judges clearly can discern the hard work put into this paper in a very challenging media environment – and the excellence it produces. No matter what the size of a publication, whether it be a local business journal or a national newspaper like the Wall Street Journal, the only way excellence is achieved in journalism is through a commitment day in and day out to produce the best stories. And that simply cannot be done without hard, hard work, something the staff of the Business Journal understands. • • • Finally, on a bittersweet note, this is my last issue as editor of the Business Journal. I will be taking a job at another publication in the Los Angeles market. I have been at the paper since October 2012, more than two and a half years. In that time, I have worked hard to improve the publication and bring the readers in the greater San Fernando Valley the business news they deserve. I believe the awards we have received reflect that effort, and I have no doubt that the paper will continue to provide excellent coverage under new leadership.

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