Terry Murden: It's Goliath vs Goliath as Hunter tends to his garden centre

Published on Saturday 10 May 2008 14:25

THE feud over control of Dobbies, the garden centre chain, will move to the courtroom tomorrow in what is viewed as a battle for shareholders' rights but is most obviously an attempt by billionaire tycoon Sir Tom Hunter to defend his own interests in the sector.

Dobbies wants to raise 150m in an issue of new shares underwritten by 65% shareholder Tesco which would dearly like to see minority shareholder Hunter off its back.

Hunter already owns the Wyevale and Blooms of Bressingham chains and regards Tesco's acquisition of Dobbies last year as a threat to those businesses.

But Tesco is also being frustrated by Hunter's presence on the share register. He has amassed a 29.2% stake and without at least 75% of the shares Tesco cannot get its own way on such things as de-listing the Lasswade-based company.

It is no great surprise, therefore, that Hunter is taking legal action to halt proposals for the share issue on the grounds that it is not in shareholders' (ie his own) interests.

Tesco argues that the cash is needed to fund an expansion plan and to ease the high level of debt on Dobbies' balance sheet.

But Hunter will have to fork out 44m if he takes up his allocation of shares in the open offer. Should he decline then Tesco would see its holding rise from 65% to as much as 84%.

Hunter's wealth is such that this can hardly be described as a David and Goliath battle, but it will cheer those who feel powerless to take on the might of companies such as Tesco.

There is more at stake, however, than simply scoring points against a company that is spreading its influence from food, clothing and financial services into yet another arena. Hunter is Scotland's richest man but he knows that Tesco has the financial muscle to dominate the garden centre sector in which he has sown a few promising seeds of his own.

If Hunter continues to want a voice in Dobbies' future then Tesco intends to make him pay for the privilege.

Should his legal case fail, he will face the choice of putting his hand in his pocket to maintain his Dobbies' holding, or pondering over his garden centre strategy and the future of the businesses he owns.

Showdown looms over British Energy

THE emergence of just one bid for nuclear generator British Energy by Friday's deadline will be a disappointment to the Treasury which was hoping for up to half a dozen interested parties.

The fall in the share price in recent days, from last month's peak of 785p to Friday's close of 701p indicated that there was little likelihood of a rush of buyers. The lack of competition will do nothing to maximise the price that the Government was hoping to get for its 35.2% stake and its hopes of getting a consortium of at least three owners.

It also puts a question mark over plans for the next generation of nuclear plants.

As things stand, the French state-controlled Electricite de France, will be in a strong bargaining position to acquire British Energy, though it is expected that at least one other bidder will come forward, possibly RWE of Germany. A move by Gaz de France-Suez is also possible, though their merger plans may mean the opportunity has come at a bad time.

One way or another, it will mean the loss of a Scottish headquartered company and a potential showdown with the Scottish Government, not over ownership passing overseas but over the future of nuclear generation north of the border.

A bumpy landing for Ferrovial

WHEN Spanish group Ferrovial acquired BAA two years ago it was clearly hoping to tap into an airports sector that looked like it was on a one-way route to expansion.

But after the chaos of Heathrow's Terminal Five it now finds itself struggling to refinance 10bn of debts.

It has raised 400m in emergency funding from shareholders in order to get the credit rating it requires, but Ferrovial has had to delay the refinancing and is being forced to look at selling one or more of its airports, possibly Gatwick or Glasgow, to raise funds.

Selling airports to meet Competition Commission concerns over efficiency and pricing is something BAA could justifiably oppose when the real issue is capacity, but it now looks like it may be forced down this route to support its ailing balance sheet.