Tesco sells Fresh & Easy to Yucaipa

Sale of Fresh & Easy to investment firm Yucaipa is expected to complete within three months



11 September 2013

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Tesco announced today that it has agreed a sale of the substantive part of Fresh & Easy’s operating business to YFE Holdings Inc., an affiliate of investment firm, 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 approximately £80m, secured against the Riverside Campus facility.

Those stores not included in the transaction will be closed over the coming weeks. In a press statement, Tesco said 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."

Founded in 1986 by Ron Burkle, Yucaipa has previously completed mergers and acquisitions valued at more than $30 billion. The company states that it works with management to strategically reposition businesses and implement operational improvements, resulting in value creation for investors.



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