“Yucaipa just seems like their format is more toward the Food 4 Less type of operation,” he said. “A price conscious customer, but with a bigger format. But they can bring in people who’ve been successful with their other banners to run that for them and turn it into a low-price operation with quality product.”
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 by the end of the year.
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 also acquires Fresh & Easy’s Riverside, Calif., distribution and production facility.