Tesco to sell unprofitable US business to American billionaire Ron Burkle’s investment firm Yucaipa (Reuters).
Britain's biggest retailer Tesco confirmed it had found a buyer for its loss-making business in the US.
Tesco will sell its Fresh & Easy brand to American billionaire Ron Burkle's investment firm Yucaipa, six years after it entered the cutthroat US grocery market.
YFE Holdings, an affiliate of Yucaipa Companies, will acquire more than 150 stores as well as Fresh & Easy's Riverside distribution and production facilities.
Tesco will loan the new business £80m (€95m , $126m) secured against the Riverside facility.
Philip Clarke, Chief Executive of Tesco, 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."
In return, Tesco would receive warrants, which can be exchanged for equity to a maximum of 32.5% of YFE Holdings provided Fresh & Easy assets turn profitable under Yucaipa.
The sale to Yucaipa is subject to legal and regulatory approvals and the transaction is expected to be completed within three months, according to a Tesco statement.
The US venture, which began in 2007, grew to around 200 stores and 5,000 employees - but also ate more than £1bn and failed to produce a single year's profit. Stores not included in the transaction will be shut, Tesco said, suggesting that the move to exit the US could lead to about a 1,000 job losses.
Tesco's stock price was trading 0.28% higher to 373.10 pence at 11:58 pm in London on 11 September, after jumping 1.3% earlier in the day.
The announcement is part of a strategy to reshape Tesco's international business structure. Earlier in the year, the British firm said it would merge its Chinese operations with state-run China Resources Enterprise (CRE), nine years after it entered the China market.
In 2012, Tesco, the world's third largest retailer, announced it would pull out of Japan after a nine-year struggle.
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