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First decade of century marked by buyouts and bubbles

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Year In Review

It started with a bursting bubble and ended with a bursting bubble. In between, the decade witnessed a massive terrorist attack, two wars, and a building-and-buyout boom fueled by easy credit.

The city skyline added an airport terminal, a football stadium, a library expansion, a massive downtown hotel, three shopping malls, four hospitals and myriad medical buildings, as well as countless condos and housing developments. It also watched two downtown stadiums come down.

Homebuilders soared and then swooned when Wall Street’s bundling of subprime mortgages created a credit crisis throughout the world. C.P. Morgan and Davis Homes went the way of Bear Stearns and Lehman Brothers. A deluge of debt created a similar boom-bust cycle at local commercial developers Premier Properties (gone) and Lauth Property Group (bankrupt).

The midfield terminal at Indianapolis International Airport was the biggest of a slew of new building projects to rise on the local skyline. (IBJ File Photo)

Acquisitions and sales reshaped the corporate landscape. Anthem became WellPoint Inc. as it rolled up one health plan after another until it covered more people than any other health insurer in the country. Mall owner Simon Property Group Inc., which built a new headquarters downtown, failed in a hostile bid for one rival but snagged three outlet operators and is grappling for more.

Insurer Conseco Inc. succumbed to its debt and limped out of bankruptcy, then chased down Steve Hilbert and other former brass for unpaid loans. Medical-device maker Guidant Corp. called off its purchase of Bloomington’s Cook Group only to become the prize in a bidding war ultimately won by Massachusetts-based Boston Scientific Inc.

Guidant’s was one of several prominent corporate names to disappear, along with Bindley Western, First Indiana, Union Federal and ATA. Marsh Supermarkets Inc. sold itself to a private equity firm but retained its local presence and name—so far.

The buyout game took local financier Tim Durham to new heights, the top of the Bank One—er, Chase—Tower, but then to deep lows. The FBI raided his offices to probe his use of investor money to give loans to himself and his friends.

Eli Lilly and Co. continued to pooh-pooh the mega-merger chase, even under new CEO John Lechleiter, but then spent $6.5 billion on ImClone Systems—its largest acquisition ever. The company had its star drug Prozac taken away early by a surprising court decision, but survived by launching a raft of new drugs. It needs a similar performance now as it faces patent expirations on five blockbusters in the next five years.

While Lilly has shed jobs to cut costs, a local life sciences initiative has attracted millions in out-of-state venture capital to feed startup companies. Indiana and Purdue universities refashioned themselves as economic development engines capable of turning science into business.

Former Lilly executive Mitch Daniels became governor—the first Republican in 16 years. He brought with him a bevy of business honchos to run state government, pushing Indiana into daylight-saving time and pulling in new investments from Toyota and Honda.

The domestic automakers fared far worse, however, as soaring gas prices ended the boom in SUVs, and retiree health care costs sapped the competitiveness of General Motors Corp. and Ford Co. Both decided to close major plants in Indianapolis.

The city’s professional sports teams traded fortunes, with the Indianapolis Colts soaring to a Super Bowl win in 2007 while the Indiana Pacers fell from a runner-up finish in the NBA Finals in 2000 to a perennially losing team known best for fighting with fans in Detroit.

Indianapolis Motor Speedway chief Tony George finally won the bitter battle between rival IndyCar leagues, but lost the Formula One race and ultimately lost his CEO job. His little-known successor is counting on female sensation Danica Patrick and new league sponsor Izod to help regain the Speedway’s cachet.

Local leaders are struggling to maintain the sports venues that were the foundation of Indianapolis’ downtown rebirth. The tennis, track and swim stadiums are stressing IUPUI, just as Lucas Oil Stadium and Conseco Fieldhouse are straining city government. Mayor Greg Ballard—who ousted Bart Peterson in a shocking upset fueled by voter ire over rising taxes—is still searching for a solution.

The new decade dawns on an economic downbeat: One in 10 Hoosiers is searching for work.•

 

 

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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