Tesco bids to buy Dobbies

Tesco today made a surprise move into the gardening world after unveiling a £155.6 million takeover offer for the garden centre chain Dobbies, which has a major outlet in Shropshire.

In a boost to Dobbies staff, the supermarket giant promised major investment in the company.

It said the proposed deal was an important part of its strategy to provide customers with greater access to affordable energy saving and environmental products.

Chief executive Sir Terry Leahy said: “Garden centres are ideally placed to support this because for many people gardening is the way they express their desire to be green.

“By offering products such as water butts, composting kits and organic fertilisers, garden centres can meet this increasing demand.”

Dobbies is one of the UK’s leading garden centre retailers with 21 stores, mainly in Scotland and northern England. It runs a store at Meole Brace, Shrewsbury, and has a shareholding in rival garden centre Percy Thrower’s.

Headquartered in Midlothian, Dobbies has more than 1,500 staff across the UK.

Dobbies said it backed the deal because Tesco’s fire-power would enable it to establish more stores and offer new products.

Takeover activity in the garden centre sector has been rife as investors capitalise on the increased popularity of gardening and green issues, plus the creation of destination stores with a wider range of products and services.

Retail tycoon Sir Tom Hunter has been active in the sector following the takeovers of Wyevale Garden Centres and Blooms of Bressingham.

He had been seen as favourite to buy Dobbies after the chain announced last month that it had received a takeover approach.

Tesco sought to head off rival bidders by announcing it had acquired or held options on more than 22 per cent of shares in Dobbies. The offer price is at a premium of 28 per cent to the company’s share price prior to the bid speculation.

Sir Terry said Dobbies represented an exciting opportunity for Tesco.

He said: “Dobbies is an excellent business with a first-class management team and a great brand that we will retain and develop from its Scottish base.”

By Neil Thomas