Tesco agrees to buy Dobbies for £155.6 million

Britain's largest retailer Tesco Plc said yesterday it had made an agreed £155.6 million offer for Dobbies Garden Centres Plc - its first move into the gardening market.

The company said it had made the 1,500 pence a share deal to develop its non-food offering, as well as to access environmentally friendly products such as solar panel heating and water management devices.

"We've had a strategy for a long time to grow our non-food offering, and this is bang on strategy," Tesco finance director Andrew Higginson said.

"Gardening is Britain's favourite hobby... and it's hard for us to retail those products in our existing stores as they require a large space - a special environment," he added.

He said Tesco would keep the Dobbies brand and its Scottish headquarters, as well as the management team led by chief executive officer James Barnes.

"It's the best business in the sector... the stores are in great shape," Mr Higginson said, adding that he would be "very surprised" if the deal attracted the attention of competition authorities.

"We've still got a low share in non-food - just seven to eight per cent," he said.

Tesco said the 1,500 pence offer represented a premium of approximately 28 per cent to the average closing price of Dobbies shares over the one month period to May 29.

Dobbies shares opened up nearly 10 per cent at the offer price.

Dobbies, which has 21 stores in England and Scotland and is known for its larger outlets, said on May 30 that it had received a takeover approach.

At first the bid was widely assumed by analysts to have come from 10.6 per cent shareholder West Coast Capital (WCC) - the investment vehicle owned by Scotland's richest man and garden centre owner Sir Tom Hunter - but a source familiar with the vehicle said it was not involved.

Hunter has bought the UK's largest chain Wyevale and the smaller Blooms of Bressingham in just over a year, as well as building a stake in Dobbies.

Tesco's Mr Higginson said he had not talked to WCC, but noted that the supermarket giant had already won control of 22.6 per cent of the firm, so was "off to a good start".

Dobbies released its interim results alongside the offer, reporting sales up 36.3 per cent at £40.0 million in the six months to end April, while pretax profits were up 43.6 per cent at 2.5 million pounds.