The purchase for an undisclosed amount is expected to be finalized within three months. The move follows a December statement by Tesco chief executive officer Philip Clarke that returns could not sustain its investment in Fresh & Easy markets in the U.S., estimated at close to $1.6 billion.
Most Fresh & Easy stores are expected to operate as usual as the transaction proceeds, according to a news release.
“The decision we are announcing today represents the best outcome for Tesco shareholders and Fresh & Easy’s stakeholders,” Clarke said in the release. “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.”
About 200 of the small-format markets operate in California, Nevada and Arizona. Tesco’s U.S. business began in 2007.
“(Fresh & Easy’s) dedicated employees and great base of customers give us a solid starting point to complete Tesco’s vision with some changes that we think will make it even more relevant to today’s consumer,” Ron Burkle, Yucaipa managing partner, said in the release.
Last December, Tesco initiated a review of Fresh & Easy’s performance by investment bank Greenhill & Co., raising the prospect that the grocer might pull out of the U.S. market.
But Fresh & Easy sought to reassure customers in January with a Facebook post announcing it planned to continue operating the stores. A logo, “Fresh & Easy Still Fighting the Good Fight,” sought to underscore that message.
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.