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EL SEGUNDO, Calif. — Tesco PLC has reached an agreement to sell its Fresh & Easy Neighborhood Markets chain in the United States to Ron Burkle’s Yucaipa Cos. private investment firm.
Tesco PLC has reached an agreement to sell its Fresh & Easy Neighborhood Markets chain in the United States to Ron Burkle’s Yucaipa Cos. private investment firm.
Tesco chief executive officer Philip Clarke said the deal represents the best outcome for Tesco shareholders and Fresh & Easy stakeholders.
"It offers us an orderly and efficient exit from the U.S. market," Clarke said, "while protecting the jobs of more than 4,000 colleagues at Fresh & Easy."
The deal calls for Tesco to loan Yucaipa £80 million ($126 million) to take possession of Fresh & Easy. When the cost of closing 50 of Fresh & Easy’s 200 stores is factored in, exiting the U.S. market will cost Tesco as much as £150 million (although more than half of that is in the form of a loan that may be paid back. And if Yucaipa is able to turn Fresh & Easy into a profitable operation, Tesco will have the opportunity to buy a stake.
Yucaipa’s purchase is expected to be complete within three months. Of Fresh & Easy’s roughly 5,000 employees, 4,000 will continue on under the chain’s new ownership.
"Fresh & Easy is a tremendous foundation," said Burkle, managing partner at Yucaipa. "Tesco should be applauded for giving their customers an affordable, healthy, convenient shopping experience. Its dedicated employees and great base of customers give us a solid starting point to complete Tesco’s vision with some changes that we think will make it even more relevant to today’s consumer. We plan on continuing to build Fresh & Easy into a ‘next-generation convenience retail experience,’ providing busy consumers with more local and healthy access for their daily needs."
