Tesco today announces that following its strategic review in the United States, it has agreed a sale of the substantive part of Fresh & Easy's operating business to YFE Holdings Inc., an affiliate of Yucaipa Companies LLC ("Yucaipa").
As part of an orderly restructuring process, Yucaipa will acquire more than 150 stores as well as Fresh & Easy's Riverside distribution and production facilities. More than 4,000 employees will also transfer to the new business. As part of the deal, Tesco will loan the new business c. £80m, secured against the Riverside Campus facility.
Those stores not included in the transaction will be closed over the coming weeks. The total cash outflow relating to the closure of these stores, other expenses and the loan is expected to be no more than £150m. The sale to Yucaipa, which is subject to the necessary legal and regulatory approvals, is expected to complete within three months. Following the completion of the full sale and disposal process, there will be no ongoing financial exposure for Tesco.
The sale is in line with Tesco's focus on the disciplined allocation of capital to those markets with significant growth potential and the opportunity to deliver strong returns.
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."
Investor Relations: Chris Griffith 01992 644 800
Media: Tom Hoskin 01992 644 645 or Brunswick 0207 404 5959
Notes to editors
Fresh & Easy opened its first stores in November 2007 and has 200 neighbourhood markets in California, Nevada and Arizona. The company employs more than 5,000 people, including 1,300 at its distribution and manufacturing facilities in Riverside.
The Yucaipa Companies LLC is a premier investment firm that has established a record of fostering economic value through the growth and responsible development of companies. Founded in 1986 by Ron Burkle, the firm has completed mergers and acquisitions valued at more than $30 billion. As an investor, Yucaipa works with management to strategically reposition businesses and implement operational improvements, resulting in value creation for investors.
Consideration received will include the issuance of warrants which will be retained and, subject to exercise criteria, could be exchanged for equity to a maximum of 32.5% of YFE Holdings Inc.
The stores, Riverside Campus and other assets subject to the transaction had a gross asset value of £229.3m as at 23 February 2013 and generated net losses before tax of £(163.4)m during the financial year ended 23 February 2013.
For more information please contact the Tesco Press Office on
We are a team of over 530,000 people in 12 markets dedicated to bringing the best value, choice and service to our millions of customers each week. Our core purpose is 'we make what matters better, together'.