Tesco has taken control of the operations of two of its US suppliers to its Fresh & Easy chain.
Head of the Fresh & Easy business Tim Mason told the Financial Times that it was a sign of its commitment to the US after expansion there was slower than planned, in part due to the difficult economic climate.
The amount paid for the deal Mason said would be “tens of millions of dollars” and involves its suppliers Wild Rocket Foods and 2 Sisters Foods.
Wild Rocket is owned by Langmead, a main produce supplier to Tesco in the UK, and provides the grocer with fresh produce in the US.
2 Sisters is Tesco’s largest meat supplier and owns the Buxted brand.
Both suppliers have facilities next to Fresh & Easy’s distribution centre which is located east of Los Angeles.
Mason said the move would lead to “synergies and economies by putting the management teams of the units together.”
He added: “We think will be very beneficial for the business.”
Mason said that the two suppliers had not performed as well as hoped as Tesco failed to hit its target of 250 Fresh & Easy stores by this year.
“Has Fresh & Easy gone more slowly than we initially planned and they initially planned? Well, yes. And that has obvious consequences,” Mason said.
He firmed that they were confident the retailer would be in a strong position to take advantage of growth when the US economy recovered.
Tesco opened its first US store in 2007, with plans to invest around £1.25bn over five years into the roll out.
The grocer plans to open around 50 new stores in its current financial year to April 2011.