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12/10/2010
DECEMBER 13 - 19, 2010
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THEINSIDER
THEWEEK DECEMBER 6 - 12 The big story: Fortune Brands decided that it might not be the best idea for one company to sell products as unrelated as Titleist golf balls, Moen faucets and Jim Beam liquor. It plans to break the company into three separate businesses. “We see the potential for even greater value by separating our businesses into focused companies at a time when they have emerged from the economic downturn in such strong positions,” said Fortune Brands CEO Bruce Carbonari, who rose through the ranks of the company, in part, by serving as CEO of Moen and Fortune Brands’ Home and Hardware division prior to 2007. Moen’s operations are based in North Olmsted.
Partner in charge: Dennis M. Lafferty, a longtime leader in civic circles, joined Cleveland State University’s Division of University Advancement as an executive-in-residence. Mr. Lafferty will be responsible for developing partnerships between the university and various stakeholders and for fostering relationships between Cleveland State and the business community. He spent Lafferty the past 23 years with the Cleveland office of the Jones Day law firm, where he was executive assistant to the managing partner and office administrator.
New life: Premier Ventures LLC, an investor group based in Irvine, Calif., is the new owner of the mostly closed Rolling Acres Mall in Akron and plans to continue its conversion to a mixeduse property. Premier Ventures paid $3 million for the mall’s 600,000-square-foot common area. The seller was CB 225 LLC, an investor based in Beverly Hills, Calif., that acquired the property for $1.7 million in July 2006. Busy year: The Riverside Co. announced the pending sale of a company in Waco, Texas, for about $150 million in a deal that is expected to close by year’s end and should produce a return of $3 for every dollar invested by the global private equity firm. The sale of The Dwyer Group to TZP Group LLC, a private equity firm in New York City, will be Riverside’s ninth sale, or exit, of the year. Riverside bought Dwyer, a holding company of seven franchise businesses focused on residential and commercial services, for $54.5 million in 2003. Compound interest: Preferred Compounding of Barberton was purchased by a group consisting of some of its own executives and a Dallas-based private equity firm, Wingate Partners. Preferred Compounding produces custom rubber compounds for molders, extruders and other manufacturers and has about 200 employees. Terms were not disclosed. The sale marks the second time Watermill has bought and then sold a controlling interest in Preferred Compounding. It was the company’s majority owner from 1996 to 1999, before buying the company again in 2001.
School funding: The Charter School Growth Fund, a national nonprofit venture capital fund, is putting $2 million into Breakthrough Charter Schools, a local charter management organization, to help open four new schools in Cleveland. By August 2011, Breakthrough plans to open two new charter schools — Citizens Leadership Academy and Near West Intergenerational School — with the support of the money, which represents a combination of low-interest loans and grants to be fulfilled over the next four years. Two more schools are planned for the following year. Breakthrough runs four charter schools.
To keep up with local business news as it happens, visit www.CrainsCleveland.com.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Wheeling and dealing in his own backyard ■ Jergens Inc. CEO Jack Schron has been doing business everywhere from China to Europe in recent years. But his company, which makes vises, specialty fasteners and other industrial tools, didn’t need to look far for its latest acquisition. “They were about 800 yards down the road,” Mr. Schron said, referring to the business he just bought from George Whalley Co., which is a few doors down South Waterloo Road from his own quarters on Cleveland’s East Side. Like Jergens, George Whalley also distributes industrial tools. Proenza Jergens has purchased the assets of its industrial distribution business, which primarily serves Northeast Ohio manufactures, Mr. Schron said. George Whalley, with about 30 employees, will continue to sell and distribute its specialized cutting tools. Neither company disclosed revenues or the sale price when the transaction was announced last Thursday, Dec. 9. — Dan Shingler
Another Super Bowl, another U. of Akron ad ■ The University of Akron is wrapping up its 13th Super Bowl commercial, and once again it’s starring the university’s president, Luis Proenza. “He’s really good at that,” said Lori Meek,
WHAT’S NEW
the university’s advertising manager. “He’s become quite the professional actor, but he’s not really acting — he’s being himself.” Ms. Meek said the ad will air in the Cleveland market during the Feb. 6 nationally televised football game. She wouldn’t elaborate on details, but said the ad would play off the same “energy” theme the university has touted over the last five years. In recent ads, Dr. Proenza has been shown handling a glowing orb of sorts to symbolize the energy at the university. Ms. Meek would not disclose the cost of the producing the ad or of airing it because the school still is involved with production and negotiations. The University of Akron’s nearby rival, Kent State University, launched a million-dollar marketing campaign this fall with a series of new TV commercials. However, Tom Neumann, Kent State’s associate vice president of university communications and marketing, said the university had no plans to go head to head with the Akron Zips on Super Bowl Sunday. “We don’t anticipate doing any ad buys for the Super Bowl,” Mr. Neumann said. — Timothy Magaw
Jones Day lawyer translates Dodd-Frank for the Chinese ■ Foreign financial institutions with branches in the United States potentially will be exposed to greater regulation by the
BEST OF THE BLOGS Excerpts from blog entries on CrainsCleveland.com.
Learned Owl owner pleased as e-book venture takes flight
COMPANY: Audio-Technica, Stow PRODUCTS: QuietPoint noisecanceling headphones Audio-Technica has introduced some hightech headphones that won’t break a holiday shopper’s budget. Both the over-ear ATH-ANC27 ($99.95) and the on-ear ATH-ANC25 ($79.95) combine “combine immersive sound with long-wearing comfort and make high-quality active noisecanceling technology more affordable than ever,” Audio-Technica says. The ATH-ANC27 over-ear model has up to 85% active noise-cancellation, and the ATHANC25 offers up to 80% active noise-cancellation, the company says. Both headphones feature technology that detects environmental noise and applies a corresponding soundcanceling signal, according to Audio-Technica. They also “incorporate high-efficiency drivers, ergonomically designed earpieces and other refinements to deliver clear sound with impactful bass, richly detailed midrange and treble and precise imaging.” Both models have a detachable cord, enabling their use as cordless noisecanceling headphones. For information, visit www.Audio-Technica.com. Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
United States as a result of The Dodd-Frank Wall Street Reform and Consumer Protection Act, a Jones Day partner recently explained to bankers and regulators in Beijing. Brett Barragate, who splits his time between the firm’s Cleveland and New York offices, traveled to China for two days to speak to the China Banking Regulatory Commission about Dodd-Frank’s foreign implications. Bob Graves, who co-heads the Jones Day banking and finance practice, accompanied him. The regulation creates opportunities for foreign banks, too, as U.S. banks likely will shed and sell certain businesses because of increased constraints, Mr. Barragate said. Chinese bankers were far more versed in Dodd-Frank than Mr. Barragate expected them to be. “They had been following it as close as anyone in the United States,” he said. China’s “significant banks” do business lending and investing via branches in New York, Mr. Barragate said, and Chinese institutions have stated openly that they intend to increase their investment in the United States. Unlike many here, Chinese bankers seemed less judgmental about Dodd-Frank, he said. Theirs is a practical approach, he said, an attempt to understand what DoddFrank is and how it affects them. The China Banking Regulatory Commission asked Mr. Barragate to speak, he said, noting a man who attended law school with a Jones Day partner now works for the commission. — Michelle Park
■ Count Liz Murphy, owner of the Learned Owl Book Shop in Hudson, among those eager to see what Google Inc. can do for the e-book world. Google last week unveiled the Google eBookstore, which could shake up the way digital books are sold. In a story that ran prior to the e-store’s unveiling, The Wall Street Journal said Google “hopes to upend the existing e-book market by offering an open, ‘read anywhere’ model that is different from many competitors.” Users are able to buy books directly from Google or from multiple online retailers — including independent bookstores — and add them to an online library tied to a Google account. Independent booksellers will be able to install Google technology on their web sites so they can sell e-books and receive a percentage of revenue. “If I don’t change with what is going on, I am going to be behind,” said Ms. Murphy, owner of the Learned Owl (a terrific store, by the way), who is eager to see what Google will enable. “People are getting e-books but they aren’t getting them from me.”
They might be mocking, but at least they’re watching ■ Parodies of LeBron James’ “What Should I Do?” Nike ad continue to outpace the real thing in online viewership, but that’s not such a bad thing, according to a short piece in The New York Times. Visible Measures, an online video measurement company, reported the Nike ad
was viewed 5.19 million times in the 27 days after its release, while parodies were viewed 5.86 million times. The company found a similar pattern with a Tiger Woods Nike ad aimed at rehabilitating the golfer’s image. Ads like these are “a necessary step in the rehabilitation of an athlete whose reputation has been damaged,” said Matt Cutler, chief marketing officer of Visible Measures. Nancy Mauro, a former associate creative director for McCann Erickson, told The Times, “Even if the benefits aren’t immediate for the athlete, they’re designed to be, in time — and you can bet the creative team is benefiting from the tidal wave of interest.”
Manufacturers may shift down a notch after stellar ’10 ■ Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, was among the experts quoted in a Reuters story that said manufacturers likely will face a slower-paced 2011 than their relatively robust 2010. “Profit margins across the sector swelled this year as companies that cut costs to the bone during the brutal recession experienced a rebound in sales that helped the Standard & Poor’s capital goods industry index to rise about 14%, more than twice the gains of the broader U.S. stock market,” Reuters reported. Analysts still expects profits to rise next year, but at a slower pace than in 2010. As one analyst said, “The comparisons are going to be getting a lot tougher going forward.” Reuters said some investors see declining margins as inevitable, as companies will need to add staff after cutting their operations dramatically during the recession. “They’re going to have to start hiring people, so their personnel costs will start going up,” said Fifth Third’s Mr. Klein.