The billionaire investor has a long history in the grocery business, going back to his days at Stater Brothers, so maybe he can do what British supermarket giant Tesco couldn't: Turn the El Segundo-based chain into a money-maker. Tesco will be selling 150 of its Fresh & Easy stores to Burkle's Yucaipa investment company (the other 50 will shut down in the coming weeks). Tesco had been talking for Burkle for some time, but the FT reported in August that the two sides were at an impasse over Fresh & Easy's liabilities. Without Yucaipa, Fresh & Easy would likely have been sold off piecemeal or shuttered altogether. As part of the deal (and no doubt reflecting the parent company's desperation), Tesco will lend the operation $126 million (it's already taken huge writedowns on the business). No details on what Burkle plans to do with the chain, though in a statement he called Fresh & Easy "a tremendous foundation." The sale also includes a distribution center in Riverside. By the way, Yucaipa already owns the Wild Oats chain, so it's conceivable we'll see some consolidation. From the WSJ:
The company entered the U.S. in 2007, targeting California, Arizona and Nevada, and the timing was terrible: All of those territories were especially ravaged by the fallout of the U.S. housing bust and recession. Beyond that, however, Fresh & Easy shops were competing directly against bigger stores with a broader range of goods. American consumers never warmed up to the chain's ready-to-eat offerings, or to its self-service check outs. In 2012, Tesco retrenched to refocus again on its home market of the U.K. The company took a £1.17 billion charge on its U.S. chain in the year ended February 2013, which added to big write-downs in the U.K. and central Europe, and all but wiped out profits for the year.