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U.S. Bankruptcy Court Judge Kevin Carey signed off on the deal late Friday. The acquisition is being financed with a $126 million loan.
"We are excited about acquiring the Fresh & Easy business," Ron Burkle, managing partner of Yucaipa, said in a statement. "We are building a great foundation and see an incredible opportunity to create a healthy, convenient food experience."
Although Tesco has successful retail operations in Europe, it found the U.S. market to be especially challenging, facing hefty competition from Trader Joe's and Whole Foods Market, forcing it to file for U.S. Chapter 11 bankruptcy protection.
Yucaipa is considered a retail turnaround specialist. The private investment firm has been credited with improving the fortunes of supermarket chains Fred Meyer, Jurgensen's and Ralphs.
In fact, Yucaipa told Judge Carey that it will likely achieve positive earnings before taxes, depreciation and amortization of tens of millions of dollars, the Wall Street Journal reported.
"History suggests, just given Burkle's involvement, Yucaipa's involvement in other grocery chains making them profitable and selling them off, that past success is an indicator they are going to be able to revive Fresh & Easy," Jeffrey Cohen, grocery industry analyst at Ibis World, told the news outlet.
Keyes served as 7-Eleven's CEO from 2000 to 2005. He also owns the Wild Oats brand name and several experts believe he may incorporate this name into the Fresh & Easy stores.