TESCO has finally put an end to its ambitious bid to crack the US market after agreeing yesterday to sell its Fresh & Easy business to American billionaire Ron Burkle.
The supermarket giant is expected to take a £150m hit on the divestment to Buckle’s investment vehicle Yucaipa, which will take on 150 Fresh & Easy stores as well as its distribution centre.
The £150m bill – including an £80m loan to Yucaipa and the cost of closing 50 stores that the US firm does not want to buy – comes on top of a £1.2bn writedown announced by Tesco boss Philip Clarke in April, when he confirmed plans to exit the loss-making US venture.
Clarke said last night the deal represented “the best outcome” for shareholders and Fresh & Easy stakeholders.
“It offers us an orderly and efficient exit from the US market, while protecting the jobs of more than 4,000 colleagues,” he added. The sale is expected to be completed within three months. Deutsche Bank analyst James Collins said the cost was “lower than we had feared”.
“It’s a clean exit, with the majority of the business going to one acquirer and the purchaser having no recourse to Tesco and there being no lingering lease liabilities for Tesco,” he said.
The deal marks a further reduction in Tesco’s overseas’ business after announcing last month it would fold its Chinese operation into a state-run company as a minority partner.