London, England, United Kingdom (4E) – Tesco Plc announced that it will sell most of its Fresh & Easy stores to Yucaipa, the investment company of billionaire Ron Burkle, paving the way for an exit in the U.S. by the British grocer after six years of doing business in the world’s largest economy.
Yucaipa has agreed to buy 150 of 200 stores of Fresh & Easy, including the distribution and production facilities, according to a Tesco statement on Tuesday. Under the transaction, the remaining stores will be closed down in the coming weeks.
Since it was formed in 2007, Fresh & Easy has never become profitable and Tesco has invested into the project 1bn pounds ($1.6bn) during that period. Analysts considered the business as a drag on Tesco’s resources at a time when it is faced with challenges in maintaining its leading position in the British grocery market.
Tesco Chief Executive Philip Clarke said that the sale to Yucaipa is the best outcome for the company’s shareholders as well as stakeholders of Fresh & Easy. Mr. Clarke added that the deal provided Tesco an orderly and efficient exit from the U.S. market.
The Cheshunt, England-based Tesco also ended its business in Japan last year. Last month, it announced plans to merge its chain store business in China with the second-biggest hypermarket chain there, citing decline in sales.