Thrifty Slams Riordan on Way Out of Town : Economy: The L.A.-based drugstore chain says it will move its headquarters to Oregon, blames mayor’s lack of action.

Thrifty Drug Stores, claiming that Los Angeles Mayor Richard Riordan did little to keep the company in the city, announced Wednesday that it will move its headquarters to the Oregon home of the PayLess drugstore chain under an agreement merging the two retail giants.

Thrifty, based in Los Angeles for 75 years, unveiled its plans as it announced the completion of an expected $1.2-billion deal to acquire PayLess from Kmart Corp., which merges 1,080 stores in 11 states under one corporate roof, creating the largest drugstore chain in the West.

The move is a blow to city and county officials who sought to persuade Thrifty to keep its headquarters in Los Angeles, and it raises questions about Riordan’s reputation as a pro-business mayor. It also is a dramatic reversal by Thrifty, which 14 months ago made a much-publicized promise to keep its headquarters in Los Angeles rather than move to Orange County.

It has not been decided how many of the 650 jobs at Thrifty’s Wilshire Boulevard headquarters will be eliminated in the merger. A transition team expects to make recommendations to the company’s board in 30 to 60 days.

The move will lead to a loss of tax revenue to the city and could have a negative ripple effect on hundreds of Southland companies that sell goods and services to managers at Thrifty headquarters.

In an interview Wednesday, Leonard Green, head of an investment company that controls Thrifty, said the city made little effort to persuade Thrifty to retain its Los Angeles headquarters.

“I have a great deal of difficulty with the mayor’s conduct in this affair,” Green said. “It’s disturbing to me personally and to the company. If this is an indication of how he is going to operate in the future, companies in this city will have a problem.”

Riordan responded Wednesday that Thrifty’s announcement was a formality that did not reflect on the city’s business retention efforts.

“This was not unexpected,” he said, reiterating comments he made in March that Thrifty had already decided to move to Oregon because the chief executive of the newly merged company lives there.

Riordan then tried to defuse the tension.

“It takes two to fight, and I’m not going to fight with Leonard,” he said. “I love Leonard and I’d like to take him out to dinner.”

Tim McAlear, who has headed PayLess, will be president and chief executive of the new company, which will be based in Wilsonville, Ore., and known as Thrifty PayLess Inc.

Green said the new Thrifty PayLess board will consider any incentives the city or county offers before deciding how many corporate employees will stay in Los Angeles. Green said he plans to meet again with Los Angeles County Supervisor Yvonne Brathwaite Burke and county economic development officials to discuss such offers.

Burke said Wednesday that Thrifty could get incentives such as tax breaks for maintaining some corporate operations in Los Angeles if the federal government establishes empowerment zones in distressed areas of Los Angeles and other cities.

Thrifty’s move to Oregon will affect companies and employees outside of its headquarters, said Jack Kyser, chief economist at the Economic Development Corp. of Los Angeles County.

“The multiplier effect includes companies that provide legal services, advertising and many other services to a company,” Kyser said. “Decisions on these services are made at a company headquarters, and you have to wonder if local companies will continue to have a shot at this business now that Thrifty is moving to Oregon.”

For example, if the purchasing operations are moved to Oregon, as many as 300 local independent manufacturers’ representatives could lose millions of dollars in combined sales, according to local suppliers.

Don Monroe, head of Monroe & Associates, a Los Angeles-based manufacturers’ representative that sells health and beauty products to Thrifty, said he has about $80,000 in annual sales to Thrifty.

“This is bad news,” Monroe said. “This move will cost me 25% of my total business, and I’ll probably have to lay off some employees.”

Carlyn Mishkin, president of Hawaiian Gardens-based Keystone Reps Inc., could also be affected. Thrifty buys stationery, school and office supplies from her company and accounts for about 30% of her business. Mishkin said she will begin to review options in case she loses the Thrifty account, one of which could be laying off some of her 12 employees.

“I’m heartsick,” she said. “It’s very sad because there hasn’t been much effort to keep businesses in the city and the state. It seems that we are going in an unhealthy direction, and it’s very troubling.”

However, Green said Thrifty will continue to be an active corporate citizen in Los Angeles.

He said the company will soon launch a foundation that will provide preventive health care and educational programs in poor sections of Southern California.

“Southern California is very important to Thrifty, and anyone who thinks we will run away is wrong,” Green said.