Tesco said today that it has agreed to sale the substantive part of Fresh & Easy’s operating business to YFE Holdings Inc., an affiliate of Los Angeles-based investment firm Yucaipa Cos. LLC.
As part of an orderly restructuring process, Yucaipa will acquire more than 150 stores as well as Fresh & Easy’s Riverside distribution and production facilities. More than 4,000 employees also will transfer to the new business. As part of the deal, Tesco will loan the new business c. £80m, secured against the Riverside Campus facility.
Those stores not included in the transaction will be closed over the coming weeks. The total cash outflow relating to the closure of these stores, other expenses and the loan is expected to be no more than £150m. The sale to Yucaipa, which is subject to the necessary legal and regulatory approvals, is expected to complete within three months. Following the completion of the full sale and disposal process, there will be no ongoing financial exposure for Tesco.
“The decision we are announcing today represents the best outcome for Tesco shareholders and Fresh & Easy’s stakeholders,” said Tesco CEO Philip Clarke. “It offers us an orderly and efficient exit from the U.S. market, while protecting the jobs of more than 4,000 colleagues at Fresh & Easy.”
Tesco said the sale is in line with the company’s focus on the disciplined allocation of capital to those markets with significant growth potential and the opportunity to deliver strong returns.
Yucaipa Cos. was founded in 1986 by Ron Burkle. The business has an ownership stake in grocery chain A&P, among many other businesses.
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