EL SEGUNDO, CA
Fresh & Easy and its London-based parent company, Tesco, are set to sell the supermarket’s 200 stores to Yucaipa, the investment firm of U.S. billionaire supermarket mogul Ron Burkle.
Yucaipa, founded in 1986 by Ron Burkle, owns the shares of a number of companies including Ralph’s, Food4Less, Fred Meyer, Golden State Foods, Alliance Entertainment, and Dominick’s. Yucaipa will acquire at least 150 Fresh & Easy stores and the company’s Riverside food production and distribution center. In addition, 4,000 Fresh & Easy employees will transfer to the new business, according to Reuters.
The acquisition deal comes a month after talks appeared to have stalled or fallen apart when Tesco, the world’s third largest retailer, previously attempted to sell its Fresh & Easy business before it would be shut down or dismantled piecemeal, according to Financial Times. The company wanted to avoid its shareholders retaining any U.S. liabilities for Fresh & Easy. The sale to Yucaipa “represents the best outcome for Tesco shareholders and Fresh & Easy’s stakeholders,” said Philip Clarke, Tesco Chief Executive Officer. “It offers us an orderly and efficient exit from the U.S. market.”
Reuters also reports that Tesco will loan the new business about £80 million, secured against the Riverside Campus facility, as part of the deal.
Nevertheless, now that the acquisition discussions have been revived, Tesco is trying to formulate the best outcome for its shareholders. Tesco said that although the closure of Fresh & Easy stores not part of the deal, the total cash outflow relating to the closure of these stores, other expenses, and the loan is expected to be no more than £150m. Since 2007, the total loss for Tesco has been around £1.28 billion.
What does this mean for California and the U.S. retail market?
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