EL SEGUNDO, Calif. — Fresh & Easy Neighborhood Market here will sell most of its 200 stores in Southern California, Arizona and Nevada to Los Angeles-based investment firm Yucaipa Cos., both companies said Tuesday.
In a statement, Fresh & Easy's Cheshunt, U.K.-based parent company, Tesco, said the sale is "the best outcome for Tesco shareholders and Fresh & Easy's stakeholders."
As part of the agreement, Tesco will loan the business about $126 million.
Yucaipa will acquire "more than 150" of the stores, along with Fresh & Easy's food production and distribution center.
"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," said Philip Clarke, chief executive officer, Tesco.
Reports had been circulating for months that Yucaipa has been in discussions with Tesco. Industry sources told SN the sticking point was Tesco's desire to avoid retaining any U.S. liabilities.
Speaking with SN in mid-August, one observer said, "When I heard Yucaipa was talking to Tesco, I knew it meant there were no other bidders because Yucaipa would not want to get stuck with all of Fresh & Easy's long-term leases when it already has so much debt with Pathmark and A&P. With so many bad [Fresh & Easy] locations, no one is likely to want to take on those leases. Certainly Tesco could find other tenants for the stores and become a big landlord, but it wants to get out altogether, all at once."
There were indications Yucaipa would name Jim Keyes, the former chief executive officer of 7-Eleven, to head a venture that would re-brand the Fresh & Easy stores as Wild Oats Markets. Keyes and several business partners reportedly own the Wild Oats name.
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