Texas Business Report: Austin Gets a Med School
The University of Texas Board of Regents approved plans for a medical school in the city, which could generate up to $2 billion for the local economy.
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The Texas economy is one of the most robust in the world. Wildly profitable companies and ingenious entrepreneurs call this state home, and what happens here influences businesses around the nation. Here’s a slice of the profits, losses, big deals, and backroom decisions happening across Texas this week.
Med About U
The University of Texas has approved plans to establish a new medical school in Austin, which could create as many as 15,000 jobs and generate $2 billion for the local economy. Austin ABC affiliate KVUE reports the university’s Board of Regents unanimously voted to contribute $25 million annually and another $5 million to recruit faculty and staff for the next eight years.
According to the Austin American-Statesman, UT will move forward with the med school “if a continuing stream of $35 million a year in community funds is raised to help support it.” Austin is one of the only cities of its size without a medical school.
The Bottom Line: Seton University Medical Center Brackenridge has also pledged $250 million to build a teaching hospital affiliated with the school, which could help “bring more oncologist and neurosurgeons to Austin,” KVUE reports.
ETP and Sunoco: The Deal is Done-oco
Dallas-based natural gas pipeline company Energy Transfer Partners announced this week that it will buy gasoline distributor Sunoco for $5.3 billion. Businessweek reports that ETP “has been looking to diversify into oil pipelines” due to the falling price of natural gas. The deal includes 4,900 gas stations owned by Sunoco and almost 8,000 miles of oil and petroleum pipelines spanning from the East Coast to the Great Lakes and the Gulf Coast, according to the Associated Press.
The Bottom Line: ETP’s parent company, Energy Transfer Equity, also acquired Houston-based Southern Union in March in a deal worth more than $5 billion. Analysts predict that ETP’s efforts to maintain a “balanced set of assets” could pay off for investors in the future, the AP reports.
Sugar Land-based Imperial Sugar announced this week that it has been acquired by a Netherlands food processing company. Imperial’s stock jumped 58 percent on the news of the $78 million deal, the Houston Business Journal reports. The buyer, Louis Dreyfus Commodities LLC, is “one of the top three sugar merchants worldwide.”
The Bottom Line: The acquisition is good news for 169-year-old Imperial, which has been struggling financially in recent years. The company reported a net loss of $53.4 million in its year-end filing in January, which had prompted concern about a potential default.
Whole Lotta Green
It’s been a solid year so far for Austin-based grocer Whole Foods, which reported a 31-percent profit increase in the second quarter, according to the Austin Business Journal. Revenue was also up, rising from $2.4 billion to $2.7 billion, or fourteen percent, over the same period last year. CEO John Mackey said the quarter “produced the company’s best results in its 32-year history.”
The Bottom Line: Whole Foods is showing no sign of slowing down its aggressive growth strategy. It opened three new stores last quarter and four so far this quarter, and five more are scheduled to open by this summer, according to the ABJ.
Winner of the Week: Apple
Apple is one step closer to closing the deal on its planned $282.5 million campus in Austin after Travis County commissioners approved a tax rebate package worth between $5.4 million and $6.4 million on Tuesday. The company has already received a guarantee of $8.6 million from the City of Austin as well as $21 million in state incentives, the Austin American-Statesman reports.
The county projects that Apple’s arrival could pump about $15 million into the local economy and create more than 3,500 jobs by 2025, according to the Statesman. This week’s deal mandates an “average salary of $35,000 for the bottom 10 percent” of employees, but commissioners dropped a stipulation that would have required Apple to hire a specific number of economically disadvantaged employees. The company must complete the first phase of construction on the new campus by the end of 2015 to qualify for the rebate.
Losers of the Week: Net Neutrality Advocates
AT&T shareholders have overwhelmingly rejected a proposal to establish a network neutrality policy that requiring the telecom giant to “commit to operating its wireless network without the ability to privilege, degrade or prioritize any traffic.” The controversial item is part of an ongoing debate on whether internet providers should be allowed to restrict or charge additional fees for specific online content.
According to Engadget, 94.1 percent of AT&T shareholders voted against the measure, while 5.9 voted in favor. However, the measure received enough support to be included on next year’s ballot, giving proponents another chance to rally for more support.