Tesco is selling Midlothian-based Dobbies Garden Centres as its chief executive continues to offload non-core parts of the retailing giant.
The supermarket group said it would receive £217m in cash for the chain from an investor group led by private equity firms Midlothian Capital Partners and Hattington Capital.
Chief executive Dave Lewis said: “Through their hard work and dedication to customer service, Dobbies colleagues have built a great business, and I would like to thank them for everything they have done.
“It was a difficult decision to sell the business, but we believe this agreement will give Dobbies a bright future, while allowing our UK retail business to focus on its core strengths.”
Retail analyst Nick Bubb said: “A number of people were interested in buying Dobbies, including its main rival Wyevale and the ubiquitous Edinburgh Woollen Mill group, so it will be interesting to hear what the City thinks of the price received.”
Lasswade-based Dobbies, which employs more than 2,700 people, was acquired by Tesco in a deal worth about £124.5m in 2008 after the grocer – then headed by Sir Terry Leahy – won a long-running battle for control against Sir Tom Hunter. The chain now has 35 stores – 15 in Scotland, 19 in England and one in Northern Ireland – making it the UK’s second-largest garden centre retailer behind rival Wyevale.
In a joint statement, Andrew Bracey of Midlothian Capital Partners and Barney Burgess of Hattington Capital said: “We are delighted to have been chosen by Tesco to take ownership of the Dobbies Garden Centres business.
“It is a great business with fantastic colleagues. We’re very optimistic about the potential of the business, and we look forward to growing the business across the UK from its base in Scotland.”
Burgess is a former commercial director Tesco, while Bracey was chief financial officer of recruitment group Michael Page and online grocer Ocado before founding Midlothian Capital Partners, which despite its name has offices in London and Connecticut.
Dobbies contributed £17m in profits to Tesco last year and its gross assets included in the supermarket’s accounts were £255m as of 27 February.
The sale comes a week after Tesco said it was offloading its Giraffe restaurant chain to Harry Ramsden’s owner Ranjit Singh Boparan and selling its Turkish operation to Swiss retailer Migros.