About 50 Fresh & Easy Neighborhood Market outlets in three states are expected to close as Los Angeles-based investment firm Yucaipa Companies LLC acquires the retailer from United Kingdom-based Tesco PLC.
More than 150 stores will stay open in California, Nevada and Arizona under the new ownership. Fresh & Easy isn’t announcing yet which stores will close, spokesman Brendan Wonnacott said.
The prospect of a sale was in the air since December, when Tesco chief executive officer Philip Clarke said the chain wasn’t profitable enough to sustain its $1.6 billion investment. Yucaipa’s purchase for an undisclosed amount is expected to be final within three months.
The stores, a distribution center and other assets were valued at $362.8 million in February. Pre-tax net losses were $258.5 million for the last fiscal year.
Tesco expects to spend the equivalent of $237.3 million on store closures and other expenses. Those include a loan of $126.6 million to the new company.
About 4,000 of Fresh & Easy’s more than 5,000 employees will keep their jobs. Yucaipa, whose managing partner is Ron Burkle, also acquires Fresh & Easy’s Riverside, Calif., distribution and production facility.
The small-format market began operations in 2007.
Fresh & Easy’s initial commitment to packaged produce hurt them, Don Goodwin, president of Golden Sun Marketing, Minnetrista, Minn., told The Packer in December. The West Coast sells less packaged produce than any region of the country, he said.
“It offers us an orderly and efficient exit from the U.S. market, while protecting jobs,” Tesco’s Clarke said of the sale in a statement.