Thrifty Likely to Move From L.A. to Oregon, Riordan Says : Economy: Mayor says the company intends to relocate after it completes its planned merger with PayLess chain.
In another possible blow to Los Angeles’ struggling economy, Mayor Richard Riordan said Thursday that Thrifty Drug Stores intends to move its headquarters to Oregon after it completes a planned merger with the PayLess drugstore chain.
A spokeswoman for Thrifty’s principal owner, Leonard Green & Partners, said no decision has been made, but Riordan said he was told personally by Leonard Green, the firm’s head, that the move will occur.
Green was unavailable for comment Thursday.
Riordan said Green told him that the new, combined company would be based in Wilsonville, Ore.--a Willamette Valley town south of Portland--largely because Tim McAlear, the head of PayLess, wants to maintain the headquarters there. The Times in December reported that McAlear would be named chief executive of the combined company under a merger plan approved by Green’s investment partnership.
“Unfortunately, this is the way that the corporate world goes,” Riordan said. “The corporate headquarters usually goes with the chief executive officer.”
Such a move would sting the Los Angeles economy because Thrifty employs about 800 people at its Wilshire Boulevard headquarters--a payroll of about $40 million a year.
It would also mean a loss of tax revenue to the city and would probably have a negative ripple effect on hundreds of Southland companies that sell goods and services to managers at Thrifty headquarters.
Riordan said he telephoned Green to try to persuade him to maintain Thrifty’s corporate offices in Los Angeles.
“I offered to get together with him,” Riordan said in an interview. “I said, ‘We will do anything’--that we would come up with something. But, basically, being a businessman myself . . . he convinced me there was nothing we could do.”
Commenting through a spokeswoman, Green denied that he told the mayor there had been a decision to move to Wilsonville. The partnership can make no decision on the headquarters site until the merger is complete, the spokeswoman said. She added that Green is willing to discuss possible incentives to remain in Los Angeles when the merger is complete.
The partnership is arranging financing to complete the $1.2-billion deal, which may be completed by early April.
At least one City Hall official said Riordan should have done more “arm twisting” of Green, whom he knows personally.
“The mayor blinked too early in this instance, and he bought what they were telling him,” said the official, who asked not to be named. “He threw up his hands early, particularly for a person who used to be a professional card player when it came to corporate takeovers.”
The possibility of Thrifty moving has been rumored for weeks. Concerned about the ripple effect of such a move, the Non-Food Merchandisers Assn. of the West recently asked Riordan to do “everything possible” to keep business in Los Angeles.
Among the group’s members are manufacturers’ representatives, local firms that sell products to purchasing office managers at Thrifty’s headquarters.
“City officials aren’t doing enough to keep businesses here,” Ray Farris, president of the group, said in a recent interview.
