EL SEGUNDO, Calif. — Fresh & Easy Neighborhood Market here said Tuesday it plans to shut down approximately 50 stores over the next two weeks — locations it is not selling to Yucaipa Cos. — although it will continue to seek buyers for those locations.
Yucaipa, the Los Angeles-based investment firm, announced Tuesday it plans to purchase approximately 150 of the 200 Fresh & Easy stores located in California, Arizona and Nevada. The sale, for terms that were not disclosed, is expected to close within three months, after which Tesco, the United Kingdom-based company that operates Fresh & Easy, plans to exit the U.S. completely, a company spokesman told SN. In a statement, Tesco said it would loan the buisness about $125 million, and said its total cash outlay for the exit would not exceed about $236 million.
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Tesco began opening the small-format Fresh & Easy stores in mid-2007. The deal will also include the distribution and food production facilities Fresh & Easy operates in Riverside, Calif., which Yucaipa said it will retain. The stores will continue to operate under the Fresh & Easy name, a Yucaipa spokesman noted, though the company said it anticipates making "some changes" to make them more relevant to consumers.
The spokesman also told SN Yucaipa expects to name a new management team for the stores for the stores next week. He declined to confirm widespread speculation that Jim Keyes, the former chairman and chief executive officer of 7-Eleven, would head that team nor whether the stores would eventually adopt the Wild Oats banner, which Keyes and a group of financial partners owns.
Ron Burkle, managing director of Yucaipa, said Fresh & Easy offers "a tremendous foundation" from which to grow.
"Tesco should be applauded for giving customers an affordable, healthy, convenient shopping experience," he said. "Its dedicated employees and great base of customers give us a solid starting point to complete Tesco's vision — with some changes we think will make it even more relevant to today's consumer.
"We plan on continuing to build Fresh & Easy into a 'next-gneration convenience retail experience,' providing busy consumers with more local and healthy access for their daily needs."
In announcing Tesco's exit, Philip Clarke, Tesco CEO, said, "The decision [to sell to Yucaipa] 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."
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