Essential reading for retailers and suppliers in the home improvement market

Tesco is shock bidder for Dobbies

Published: 8 June 2007
Tesco, has emerged as the shock bidder for Edinburgh-based Dobbies Garden Centres.
The supermarket chain has posted a £156m bid for the garden chain, an approach that has been recommended by the Dobbies board.

Last week Dobbies confirmed that it had received an approach, but industry watchers believed it was either from long-time stalker, Sir Tom Hunter's West Coast Capital Group, or venture capitalists, Apax.

The bid by Tesco has sent shockwaves throughout the industry, and has come completely out of the blue.

Tesco chairman, Sir Terry Leahy, is quoted on The Guardian website, Guardian Unlimited, as saying: "The increasing popularity of gardening, and in particular, the trend towards environmentally-friendly products, makes this an attractive sector for Tesco to invest in.

"The deal is an important part of our strategy to provide customers with greater access to affordable energy saving and environmental products."

Tesco has backed its bid by buying a 22.6% stake in Dobbies. This is said not to include Sir Tom Hunter's shares (he has 10.6%). Tesco said it had not contacted the Scottish entrepreneur.

Half year

Tesco's statement overshadowed Dobbies' own half-year results, which showed pre-tax profit over the six months to April 30 was up 43.6% to £2.5m on sales that rose by 36.3% to £40m.

Like-for-like sales were also strong, rising 10.9%. But same-store sales for May were down 7% due to poor weather.

In a separate development, Dobbies announced its latest venture - a £12m state of the art combined garden centre and retail complex at Barlborough Links, just outside Sheffield - is to include six branded retailers including Whittard of Chelsea, Antler, Cotton Traders, and Julian Graves.

Dobbies' 51,000 sq ft garden centre is due to open in mid-September this year, serving the Sheffield, Worksop and Chesterfield area with a catchment of 1.5 million customers.

Founded in 1865, Dobbies has a chain of 21 garden centres across Scotland and the north of England and employs just over 1,500 people.

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