(Editor’s note: This post was updated at 3:15 p.m. on Monday, August 13. We thought we’d be bringing you a complete explanation from PNC Financial officials about their Friday announcement PNC had acquired 10 percent of Brown-Forman stock. Instead, we got no explanation. Fred Solomon, vice president, senior manager of External Communications at PNC Financial Services Group, called the event a “misfiling,” but declined to discuss details. Asked to categorically say Brown-Forman is not in play, Solomon replied, “We would never comment on something like that.” So that’s where it stands.)

Welcome to the August 13 top secret, always confidential Monday Business Briefing.

These are biz tips Insider Louisville staff and contributors have collected during the past few days, a few of which are NOT double-verified like Insider Louisville’s daily reporting.

But as always, this is information from insider sources with direct knowledge of events.

Again, we thought we’d finally hit the summer business news doldrums.

Not this week ….

• On Friday, PNC Financial Services Group announced it had acquired 10 percent of all Brown-Forman shares. Which for those who follow equities markets – and worry about Louisville losing a major corporate citizen to Wall Street raiders – was a “holy shit” moment, excuse our French. U.S. Securities and Exchange Commission rules make investors crossing the threshold of a 5 percent stake in a company issue a Schedule 13D filing, requiring them to state their intentions. The assumption is, any institutional investor, investment bank or corporate raider acquiring a huge stake – a controlling position – has plans for that company.

Such filings may be a precursor to hostile takeovers, company breakups and other “change of control” events. But what’s going on? Could PNC be a stalking horse for a Carl Icahn-style raider?

Here was the original announcement: As of July 31, PNC held 8,857,001 shares of Brown-Forman, according to a filing with the U.S. Securities and Exchange Commission. Shares of Brown-Forman closed at $91.56 on Thursday, giving PNC’s investment a value of $810.9 million.

On Saturday, PNC Financial Services Group Inc. backed off its original announcement, issuing a release that it has “erroneously reported a 10.32 percent stake in Brown-Forman, which would have made it the alcoholic drink maker’s largest shareholder, with shares worth $810.9 million.” You’re reading that correctly … nearly a $1 billion stake. In the modified statement, PNC execs said they own a stake in Brown-Forman, but less than the 5-percent threshold that would require PNC to disclose exactly how big. PNC spokeswoman Amy Vargo “could not say how the error occurred,”  according to Reuters.

Which is mind boggling.

Brown-Forman’s largest reported shareholders are Wayne Hancock’s Louisville-based Atlas Brown Investment and Vanguard Group, the Philadelphia-based fund. Each hold more than 5 percent of the company’s shares as of March 31, according to Thomson Reuter. Did PNC Financial Services just make a silly, silly boo-boo, or is the game afoot? Without researching deeply into BF articles of incorporation and other docs, we have no idea what sort of internal firewalls, such as Class-A trust provisions, are built in to keep it from being acquired. But in conversations with insiders, there is no doubt Brown-Forman is in a risky space – too small, yet too profitable, not to be tempting to the industry giants. At the same time, the number of Brown heirs is increasing, along with the possibility one or several will go Sallie Bingham and force a sale of the company.

And for context, with $3.4 billion in 2011 revenue, Brown-Forman is tiny compared to Diageo (about $30 billion in 2011 revenue), LVMH ($30 billion) , Pernod Ricard ($15 billion) and Sazerac, which is privately held.

We can hear Phil Lynch poo-poing this whole post from 18th and Broadway. The reality is, small, profitable publicly traded corporations get punished. Sooner or later someone is bound to ask if Brown-Forman is more valuable broken up into component pieces. How much is Jack Daniels’ worth to Sazerac or to Diageo? How much would Brown-Forman be worth if combined with Beam Inc.? The fact that Louisville depends so heavily on the company for its philanthropy and its leadership doesn’t figure into the calculus.

It’s not good. It’s not bad.

It’s just capitalism.

• Speaking of capitalism, our insiders tell us General Electric management wants the local contract (local supplement) at Appliance Park opened up for bargaining and this is what they want:

1. Job Bidding- No bidding on jobs unless there is a monetary gain

2. Trades – No trades allowed

3. Bumps – Bump least senior person in your classification on any shift


5. Maintenance – frozen in their buildings

The national contract between the company and unions was passed by the workers last year. At that time, the local supplement was continued without discussion. As it stands now, every job is available to be bid by any employee, according to our source. The change would stop workers from bidding unless bidding on a classification that is of a higher level (more pay). “Trades” can be executed between workers for the purposes of shift selection as there is currently no shift preference agreement, which we hear is unprecedented in union environments. The “bump” process is weird and antiquated and is triggered in case of a “reduction in force” (layoff) or a line-speed change in any building, according to sources. The bump is park-wide and happens several times a year, resulting in workers being shuffled to other shifts, off of jobs with which they are familiar and into jobs they have to be trained to do. Critics complain quality suffers greatly after a bump. Use of temps is interesting, being that GE at Appliance Park has taken 20,000 applications this year alone. Sources say the turnover rate is around 60 percent! These items are significant news for a company that constantly brags about adding jobs.

• This has been painful, but we understand that Arlington, Va.-based Interstate Hotels & Resorts  has finally consummated the deal giving it full ownership of the Seelbach Hilton Hotel, (the business, not the building.). Our sources inside say look for Interstate to start to invest in crucial maintenance and improvements at the historic hotel at Fourth and Muhammad Ali … at long last. Interstate bought out partner Investcorp, a global investment firm based in New York. Look for a news release in Business First this week.

• Sources tell us a number of national contractors are establishing offices or long-stay hotel contracts here as the Ohio River bridges projects get closer to becoming a reality. Those firms include Omaha-based Kiewit Bridge and Marine, San Francisco-based URS Corp. and Amsterdam, Netherlands-based Arcadis.

• Look for a locksmith firm to take the former Flame Run building at 828 E. Market in NuLu. That was the announcement during the East Market District Association’s monthly meeting last Wednesday.

Pyro Gallery is moving from West Main Street to NuLu. Look for the arty gallery to move in next door to Cake Flour at 909 E. Market St.