Pharma Giant, Hillwood Talks Near Finish Line

ROANOKE, TX-Two of the three aren’t really talking about a 30-acre site under option for a 275,000-sf regional office and distribution center in Roanoke’s section of AllianceTexas. Denton County says it doesn’t put incentives on the table on a speculative basis so it’s saying AmerisourceBergen Corp. is headed its way.

AmerisourceBergen’s Michael Kilpatric, vice president of investor relations, confirms talks are underway with Hillwood, but he isn’t saying it’s a done deal or when it might be. Last year, the leading pharmaceuticals giant, which leases sites in Carrollton and Grand Prairie, rolled out a multi-million-dollar plan to revise its distribution network to realize a long-term savings of $50 million annually just from the real estate consolidation.

Tye DeBerry, director of Denton County’s Economic Development Corp., tells GlobeSt.com that the plan was to break ground in January. “But,” she said, “that could have changed.” Inside sources say a closing date for the site acquisition has not been scheduled.

About a month ago, the county and Roanoke OK’d incentives based on 170 jobs initially and 250 by the fifth year. The incentives called for a 75% rebate on the inventory tax for 20 years if $100 million was recorded in the first year. The second year had to generate $110 million and the remainder of the time, $125 million annually in order to collect the perk. There were no abatements for real estate or personal property for the center, which will service five states. “They’re just papering the deal from what we understand,” says DeBerry.

The Valley Forge, PA-based drug company is shaving 21 distribution centers from the portfolio so that 30 remain, 28 situated in the continental US. The change includes expansions at seven centers and six new ones.

AmerisourceBergen is guarding the identity of the locations to be closed like it’s a state secret, announcing changes only after they are made. In recent months, a distribution center in Portland closed and operations moved to an existing facility in Seattle. A Sacramento operation moved into a larger building in the same city. Idaho Falls, ID was rolled into Salt Lake City and Mira Loma, CA went to a SoCal counterpart in Corona. Two centers in unidentified cities broke ground in the company’s fourth fiscal quarter, which just ended.

So far, the plan is on track, with the first year delivering seven consolidations. “We believe we’re headed toward building the highest quality and lowest cost distribution center in the industry,” Kurt J. Hilzinger, AmerisourceBergen’s president and COO, said in last week’s earnings call, one of the few places to glean some information about its real estate swaps.

Hilzinger also said it takes two years to build, equip and bring a facility on line. The goal is to have the six new high-tech distribution sites up and running by late 2004, creating an obvious deadline for buying the land, here and elsewhere, which means a 2003 start. The realignment, which started last year, was projected to take four to five years to complete.