Downtown needs the real |
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The temptation is great to draw comparisons between the failed merger of Sharp Healthcare into Columbia/HCA and the proposed merger of Enova Corp. (SDG&E) with Pacific Enterprises. Similarities exist. But don’t get carried away; apples and oranges are both round, too. An exercise to learn lessons from one that apply to the other may be less than enlightening. The Sharp deal was motivated by Peter Ells-worth's ambition to build, a motivation so great he appeared blinded to the negative consequences and positive alternatives. Enova Chairman Tom Page also may like to retire with a bang. At this point, though, he's more sea soned than Ellsworth was before Sharp's merger effort. Embarrassed by Southern California Edison's take over attempt a few years ago, Page presumably learned a lot about how not to fail the next time. (Page did not seek out SCE; he sought the Tucson utility, a reasonable acquisition of an adjacent company smaller than SDG&E. That's when SCE pounced on San Diego and all but forced Page to accede.) This time, Enova is smarter. By seeking out a large merger partner, it has built a mighty defense against a similarly large, more ambitious and predictably irritated SCE. By reaching out to San Diego’s leaders to inform them before the deal is a deal, it is avoiding the public relations disaster that SCE and SDG&E could not overcome in the last go-round. Somewhat troubling is the willingness of San Diego Chamber Chairman Steve Cushman and outgoing Economic Development Corp. President Dan Pegg to endorse the Enova deal so soon. Flattered by Enova's early briefings, they responded publicly by endorsing the proposed merger. Their endorsements months later would be more meaningful had they responded initially: "We’re intrigued by the proposal. We like it. It requires more analysis. We look forward to the public hearings." Instead, a man better known for knee jerk reaction than Cushman or Pegg, UCAN's Michael Shames seems to be the one prudently holding back an opinion. One might have expected him to oppose the merger instantly. Instead, he seeks assurances that what Enova and Pacific Enterprises say they're going to do, they really do. (This position alone suggests Shames appreciates that Enova's and Pacific Enterprises' intentions are well stated.) Shames is now in a better position than Cushman or Pegg's successor to negotiate sweeteners for San Diego. Among the subtleties not quite broached in Libby Brydolf's excellent report beginning on Page 32 is the precise location of the merged Enova/Pacific Enterprises headquarters. Bill Reed, vice president of regulatory affairs, advised Brydolf that the SDG&E utility will remain headquartered in Downtown San Diego. But he would say only that the new parent corporation's headquarters will be located somewhere within the city of San Diego. That ought not to be good enough for the Downtown San Diego Partner-ship. Steve Baum and his fellow decision-makers belong Downtown, not sequestered in some Golden Triangle hideaway because it’s 12 minutes closer to his home. Arguing that a Golden Triangle HQ would be 12 minutes closer to Pacific Enterprises' L.A. quarters also is not persuasive. If the new Fortune 500 stature Enova/Pacific Enterprises will not be headquartered Downtown, the Partnership and San Diego City Council can kiss off hopes of attracting other corporate headquarters to the inner city. They can amend the General Plan to give up the words Downtown and Central Business District. For decades to come, they can pour more public funds into urban renewal to make up for the dearth of private enterprises. Promising the Enova/Pacific Enterprises headquarters to help forestall a blighted inner city can be negotiated to win more favor for the merger. That's why it’s wisest to withhold endorsements until more of the subtleties and opportunities are understood. |
