TESCO last night unveiled a deal with a billionaire supermarket investor to sell a “substantive part” of its troubled United States-based Fresh & Easy unit with the loss of up to 1,000 jobs.
An affiliate of Yucaipa, controlled by venture capitalist Ronald Burkle, will acquire 150 stores as well as Fresh & Easy’s Riverside distribution and production facilities. The value of the deal was undisclosed.
More than 4,000 employees will transfer to the new business, but 1,000 permanent and temporary jobs will be lost as the remaining 50 neighbourhood shops across Arizona, California and Nevada are shut.
Tesco said the business made pre-tax losses of £163.4 million in the year to 23 February and was valued at £229.3m.
As part of the deal, Britain’s biggest supermarket chain will loan the new business around £80m, secured against the Riverside facility, Tesco said. The sale marks a turnaround for the supermarket giant, which saw talks with potential buyers collapse last month, giving rise to fears Tesco would have to shut down the business.
Chief executive Philip Clarke last year admitted the company’s American expansion plans had “failed”.
In April, Tesco slashed £1 billion from the value of the business after it decided to exit the US market.
It is thought Yucaipa could merge the Fresh & Easy outlets with its recently-acquired chain of wholefood stores, Wild Oats, which is based in Colorado.
Clarke 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.”