An affiliate of Ron Burkle’s Yucaipa Cos. announced Tuesday it had agreed to purchase the Fresh & Easy chain from British supermarket firm Tesco.
The decision comes as the supermarket chain was considering closing some or all of the stores, which have lost about $1 billion since its 2007 founding and aggressive expansion into the Southern California and Southwest market.
“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 U.S. market, while protecting the jobs of more than 4,000 colleagues at Fresh & Easy,” Philip Clarke, Tesco’s chief executive, said in a statement.
Fresh & Easy has nearly 200 stores throughout California, Arizona and Nevada. It has 34 stores in Los Angeles County, including 15 in the greater Valley region, with locations in Camarillo, Burbank and Northridge.
Fresh & Easy wrote on its website Tuesday that while the purchase benefits all involved, some locations may still close.
Burkle, managing partner of Yucaipa Cos., said in a statement he hoped to continue expanding the Fresh & Easy chain to 220 stores, which was Tesco’s original target.
“We plan on continuing to build Fresh & Easy into a ‘next generation convenience retail experience,’ providing busy consumers with more local and healthy access for their daily needs,” said Burkle, a billionaire who built his original fortune in the supermarket business.
Yucaipa's acquisitions over the years have included the Food 4 Less, Alpha Beta, Ralphs and Great Atlantic & Pacific Tea Co. grocery chains.
Terms of the sale were not disclosed, but the New York Times reported that Tesco was expected to lend the acquiring entity $126 million. Yucaipa is expected to complete the purchase within three months.
The travails at Fresh & Easy forced Tim Mason, chief executive of Fresh & Easy Marketplace Inc., to resign in December. Tesco then hired Greenhill & Co. Inc., a New York financial advisory firm, to review options for the beleaguered stores.