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Lilly to sell Lafayette plant to German firm

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Eli Lilly and Co. will sell its manufacturing plant in Lafayette to a German company in its first major move toward reducing its work force by 5,500 employees and cutting its operating expenses by $1 billion.

Indianapolis-based Lilly signed a nine-year contract with the buyer, Evonik Industries AG,  to supply Lilly with the active pharmaceutical ingredients the plant makes. Evonik will offer jobs to the nearly 700 full-time employees at the plant.

“The employees are the key to the success of this deal,” said Tom Bates, president of the North American region for Evonik, which is based in Essen, Germany. He said the company would offer comparable salaries and benefits to the employees.

Lilly did not disclose financial terms of the sale, but it will take an accounting charge of 23 cents per share, or about $264 million, in its third quarter financial report, which it will release on Oct. 21.

Some of those costs will come from giving severance packages to all the full-time employees dedicated to the Lafayette site. Lilly did not disclose the details of those packages.

About two dozen other employees who are not dedicated to the Lafayette site will relocate to Indianapolis. Also, about two dozen contract employees at the plant will not be offered jobs.

The sale is expected to close by the end of the year.

“This announcement today certainly support our goals of becoming a leaner and competitive company given the challenges the company faces,” said Lilly CEO John Lechleiter. Lilly announced its job and cost reduction goals on Sept. 14. It aims to achieve those goals by the end of 2011.

The plant near Lafayette, which is called the Tippecanoe Laboratories, currently makes active pharmaceutical ingredients for Lilly drugs Cialis, Cymbalta, Gemzar, Alimta and Tylan, an animal health product. It was founded in the 1950s to make large batches of antiobiotics.

Because today’s drugs come in smaller doses, the plant has been underutilized. Evonik plans to use that excess capacity to serve other drug companies, both large and small, Bates said.

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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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