According to an OregonLive article, tire company Les Schwab has signed a deal to sell to Meritage Group, an investment fund from California. This move ends local family ownership of the well-known Oregon-based business.
Plans were announced in December to sell the business following a 68-year history. The family experienced difficultiesin running a fifth-generation family business, according to article.
Les Schwab Tires was created in Prineville in 1952 by Les Schwab himself, and has grown to almost 500 stores in 10 states. Schwab passed away in 2007, but the annual sales in the company he created are still $1.8 billion.
Terms were not reported for the transaction, but Schwab and Meritage did reveal that the current management will remain, and operations will not change. Aubrey Barth, managing director of Meritage, told Oregon Live “We see Les Schwab Tires as an ideal investment. The company’s exceptional employees and programs, strong financials, and respected, customer-focused brand set it up for success for years to come.”
Billionaire investor and climate change activist, Nat Simons, is Meritage’s founder. Meritage manages more than $10 billion in assets, according to Oregon Live, and it has large holdings in Google, Charter Communications, Microsoft, Salesforce, and Sherwin Williams Co., among others, including Columbia Distributing based out of Portland.
Schwab CEO Jack Cuniff told Oregon Live, “Meritage Group has a history of preserving culture and values while growing its companies with investment over time. This is a great fit, and aligns well with Les’ vision and all we have built together.”
When announcing plans to sell, the Schwab family insisted that any new owner would need to keep the company together and maintain the headquarters in Bend and the distribution center in Prineville.
The family said in a statement, “As our family grows and ages, it has been very important to us to remain committed and aligned behind our grandfather’s vision. While it was hard to make the decision to sell the Company, we are very confident Meritage Group will continue that commitment and alignment, and will build on all we have accomplished over the past 68 years.”
Continuing the commitment to Schwab’s vision involves adhering to the practices that have come to be expected of this local business. These includes profit-sharing half the profits from each store with employees, and only hiring managers from within the company. While the chain has grown from California to Colorado, all products go through the warehouse in Prineville. Employees still greet customers in the parking lot and often fix flats for free, with the hopes that customers will return in the future to purchase new tires.
Schwab’s dream was to keep the business in the family forever. In 1997, he told The Oregonian: “The company isn’t for sale. It will go on, bigger and better than ever, and continue to provide opportunities for young people to be successful. All the stock will remain in our family.”
Schwab’s children both passed away before he did, and his widow Dorothy Schwab died at age 98 in 2016. Their four grandchildren now live out of state, and while some of the heirs serve on the company’s board, none hold executive positions.
The goals for Meritage purchasing Les Schwab are unclear, but it’s possible they may put money into growing the business. Dave Garten, a business strategy professor at Portland State University told Oregon Live that it’s hard to say what the intentions truly are. “Financial investors have a lot of different motives, so we’re spit-balling possibilities but we don’t really know yet.”