The British supermarket chain Tesco has agreed to sell more than 150 stores of its loss-making Fresh & Easy chain as well as distribution and production facilities in Riverside, California to YFE Holdings, an affiliate of Yucaipa Companies.
The sale is part of Tesco’s plans to focus on markets that offer significant growth potential and strong returns.
As part of the deal, Tesco will loan the new business circa £80m secured against the Riverside Campus facility. In addition, more than 4,000 employees will also be transferred to the new business.
Tesco said that the total cash outflow relating to the closure of these stores, other expenses and the loan is expected to be no more than £150m.
Philip Clarke, CEO of Tesco, said: “The decision we are announcing today represents the best outcome for Tesco shareholders and Fresh & Easy’s stakeholders. It offers us an orderly and efficient exit from the US market, while protecting the jobs of more than 4,000 colleagues at Fresh & Easy.”
Fresh & Easy, which opened its first store in November 2007, has 200 stores in California, Nevada and Arizona. It employs more than 5,000 people. Tesco is planning to close stores that not included in this sale in the near future.
The stores, Riverside campus and other assets generated net losses before tax of £163.4m during the financial year ended 23 February 2013.
The British grocer lost about $2bn over the last five years in the US.
Yucaipa Companies is owned by the US billionaire Ron Burkle.
The transaction, which is subject to legal and regulatory approvals, is expected to complete within three months.