Never mind the Chelsea Flower
Show. The really fascinating battle of the blooms culminated
yesterday in a decisive victory for Tesco over the Scottish
entrepreneur Sir Tom Hunter. The supermarket group has reached
agreement with Sir Tom's West Coast Capital to buy its stake
in Dobbies Garden Centres, giving it total control of the
chain.
In hindsight, there was only ever going to be one winner
in what has become an increasingly bitter row between Tesco
and Sir Tom. It's a loss that will cost Sir Tom £9m
– the difference between the £15-a-share Tesco
offered him for his stake in Dobbies last summer and the
£12 it agreed to pay yesterday.
Critics of Tesco will claim this is another case of the
retailing juggernaut rolling over anything in its path.
Yesterday's deal was reached following the failure last
week of West Coast to block the plans of Dobbies' Tesco-dominated
board for a rights issue under which Sir Tom would have
to find £44m to prevent his stake being diluted.
That strategy came unstuck when a court ruled against West
Coast, which had argued that the rights issue and a dividend
reduction previously announced by Dobbies, was part of a
plan designed to bully minority shareholders.
The rights issue has now been postponed – and will
almost certainly be abandoned given that Tesco will now
be able to take Dobbies private. Now Sir Tom must watch
and wait to see how Tesco's plans for the chain impact on
the larger garden centre businesses he owns, Wyevale and
Blooms of Bressingham.
On the face of it, Tesco's plans for Dobbies pose more of
a threat to DIY chains such as Homebase and B&Q, which
also operate in this sector. The supermarket group wants
to launch several Dobbies Garden World stores to take on
these chains, and also has plans to sell of-the-moment environmental
products such as solar panels and wind turbines.
However, one intriguing detail to emerge from last week's
court case was that Tesco had apparently offered to pay
Sir Tom £15-a-share if he agreed to sell it 31 Wyevale
stores for £175m, so the supermarket group clearly
has ambitions in this area of the market too.
Tesco's chief executive, Sir Terry Leahy, is famously single-minded
in his efforts to drive his company on to ever greater market
domination. At Dobbies, however, the credit for victory
belongs to Sir Terry's legal and corporate affairs director,
Lucy Neville-Rolfe, who was appointed last year as chairman
of the business.
Not that Ms Neville-Rolfe has given up the day job. Though
she had been busy securing full control of Dobbies for Tesco,
she has still found time to manage the retailer's libel
action against The Guardian. That case has yet to be settled
despite the newspaper's claim it has corrected a story that
accused Tesco of extensive tax avoidance. The paper's legal
advisers should be very afraid.
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