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TESCO DEAL ENDS BATTLE FOR DOBBIES

Britain's biggest retailer will take control of Dobbies Garden Centres

Thursday May 22,2008

By Peter Cunliffe, Deputy City Editor

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THE BATTLE for control of Dobbies Garden Centres ended yesterday with a compromise deal that will see entrepreneur Sir Tom Hunter selling his stake to Tesco.

This paves the way for Britain’s biggest retailer to take full control of the business, valued at £125million, ending a tussle that has been rumbling on since last June.

Scotland’s richest man, Hunter has agreed to sell the 29.2 per cent stake held by his West Coast Capital investment firm for 1200p a share, or £36.3million.

Tesco, with 65.6 per cent of the shares, will be free to mop up the remaining minority holders and delist Dobbies shares from the Aim market.

The supermarket has pledged to retain the Dobbies brand name and head office in Midlothian.

Last June Tesco launched a £156million bid for Dobbies at 1500p a share but its plans were thwarted by Hunter, who owns the rival Wyevale and Blooms of Bressingham garden centre chains.

He built up a blocking stake in the business but then launched a legal battle with Tesco after the supermarket unveiled plans for a £150million cash call on shareholders.

Under the terms of the fundraising, his stake would have been massively diluted unless he spent £44million buying more shares.

Hunter is thought to have broken even on his investment in Dobbies, having built up his stake at prices between 500p and 1750p a share.

One analyst said: “It could have taken Hunter two years to fight this and all that time his money would have been tied up and going nowhere.”

At its annual meeting yesterday, Dobbies chairman and Tesco director Lucy Neville-Rolfe said that in the six months to the end of April total sales rose 4.5 per cent but underlying sales, excluding new outlets, fell 6.8 per cent.

But in the past three weeks, trade had picked up in the warm May weather, with underlying and total sales up
15.8 per cent and 30.2 per cent respectively.

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