Pacific Enterprises Sheds Thrifty Corp. : Profile: Leonard I. Green and his firm have gained wide admiration and respect among takeover specialists.
The buyer of Thrifty Drug Stores and Big 5 has an unusual reputation among takeover specialists--widespread respect.
Los Angeles-based Leonard Green & Partners, led by a low-key veteran of the booming 1980s buyout years, Leonard I. Green, will purchase five of six retailing units of Thrifty Corp., the troubled subsidiary of Pacific Enterprises.
The choice has been greeted with relief by both Southern California executives and union leaders.
“I think it’s good in all respects,” said Michael E. Tennenbaum, vice chairman of investment banking in the Los Angeles office of the New York investment bank Bear Stearns.
“It’s very good that we have a Los Angeles-based buyer,” Tennenbaum added, “because I think it’s time for the town to pull together--and hopefully there will be some community considerations as well as financial ones. Leonard is a very classy guy. I’m sure that won’t be lost on him.”
Many in the Southern California retailing business had been concerned in recent weeks about reports that the Thrifty Corp. chains might be sold to out-of-town investors. That prospect particularly nettled critics of Thrifty Corp.’s management under Pacific Enterprises, which was blamed for lacking the close control of experienced retail executives.
Green, who was unavailable for comment Friday, is described as the opposite of the popular notion of buyout artists who purchase firms, strip the assets and quickly sell them again.
“His method of working is to acquire a company and, with the involvement of management, make it a successful company--and to obtain substantial returns for his investors . . . not to slash and burn,” said Ken Bishop, a partner specializing in corporate securities at the Century City offices of the law firm O’Melveny & Myers.
Green, 58, has spent two decades in the buyout business--most visibly as a founding partner of Gibbons, Green, van Amerongen Ltd., where he helped negotiate such major, well-publicized deals as the 1986 buy of Budget Rent-a-Car Corp.
In May, 1989, citing “philosophical differences,” Green split off to form his own Los Angeles-based company, putting together a war-chest of commitments from various investors of about $200 million.
“The junk bond market had cratered at the end of ‘89,” recalled Lloyd Greif, president of Greif & Co., a Los Angeles-based investment banking firm, “and the fact that he could complete the fund-raising for a new leveraged buyout firm in that kind of tenuous environment speaks wonders about the respect he commands in the marketplace. He was out there beating the bushes for money when most of his peers were on the sidelines.”
The new firm’s first acquisition, in August, 1990, was Carr-Gottstein Inc., the biggest food and drug retailer in Alaska, for $300 million. In 1991, the partners bought a majority interest--for about $100 million--in Almac’s Supermarkets Inc., a New England grocery chain, then owned by Claremont-based Yucaipa Stores, owner of the Boys and Viva supermarkets.
Its fourth and most-recent previous buy was a $42-million takeover last February of Arimco, an Australian mining company.
Along the way, Green has impressed even traditional skeptics of the leveraged buyout industry.
“We’ve dealt with them in the past; we’re glad that they are the successful bidder,” said David T. Barry, international vice president of the United Food and Commercial Workers International Union, which represents about 2,000 Thrifty Drug Store employees.
“They are decent and honorable to work with,” Barry said Friday. “We view (Green) as someone we could sit down and talk to, someone we will try to work with.”
