Hunter throws in the trowel as Tesco take Dobbies

Published on Wednesday 21 May 2008 14:19

SIR Tom Hunter today lost his battle for control of Dobbies Garden Centres with Tesco after agreeing to sell his stake.

The retail billionaire's investment vehicle West Coast Capital (WCC) has agreed to sell its 29.2 per cent stake to Tesco for a cut-price 36.3 million.

The deal, which at 1200p a share is well below Tesco's initial 1500p a share offer, now puts the supermarket giant in the position to take the company private.

It already owns 65.5 per cent of Midlothian-based Dobbies and has now easily exceeded the 75 per cent share it needs.

Dobbies was today holding what is now likely to be its final annual general meeting at its Lasswade headquarters.

In a statement today, Tesco said: "Tesco Holdings believes that the offer is good for Dobbies' customers, staff and the wider community.

"It continues to be Tesco Holdings' intention to retain Dobbies' head office in Midlothian and its unique brand, heritage and culture under the Tesco Group umbrella."

Last week Sir Tom, who owns rival garden centre chain Wyevale and Blooms of Bressingham, lost a legal battle with Tesco to prevent a 150m open offer of new shares to raise funds for expansion.

It would have cost around 40m for WCC to buy the extra shares and maintain its stake in the business, which could otherwise have fallen to around 15 per cent.

It is unclear whether the planned fundraising exercise with shareholders will go ahead following Sir Tom's acceptance of the offer. A Tesco spokesman said it was a matter for Dobbies' board.

The exit of the entrepreneur, Scotland's richest man, removes a thorn in the side of the retail giant and allows it to press on with its plans for the group.

It aims to use the stores to capitalise on the current boom in gardening and related demand for "green" products, such as composting kits and water butts.

Tesco has pledged to maintain the Dobbies brand, which dates back to 1865, but wants to expand the group beyond its current 23 sites.

Further deals are in the pipeline for Dobbies after its latest 8m purchase of the Sandyholm garden centre in Lanarkshire, last month.