Wyevale leads bidding to acquire Dobbies chain

Dobbies will be sold by the end of next month and Wyevale Garden Centres' initial £175m bid is unlikely to be topped by more than £5m, say sources close to the deal.

Wyevale owner Terra Firma is believed to have bid £175m for Dobbies, which was founded in 1865, but sources suggest three other venture capitalists could bid and further offers could come in during round two. One may be linked to former Dobbies chief executive James Barnes, who left three years ago. Barnes told HW he could not comment on any rumoured bid.

Dobbies' book value is £200m and £153m-turnover Dobbies owner Tesco is understood to be keen to unload as quickly as possible. Sources suggest Wyevale could make its money back through a sale and leaseback of some Dobbies centres. Wyevale sold and leased back eight freeholds in December 2015 for £91m and has six sold and leased back from LaSalle, which subsequently sold them to Black Rock last year.

Wyevale said it had nothing to add on a bid, although it has expressed interest in buying Dobbies more than once in the past year. Sources suggest other quick cost savings and business developments for Wyevale after a possible purchase could be to shut Dobbies' Edinburgh head office and cut management staff, introduce nationwide web ordering, add concessions, consolidate suppliers, raise prices and add children's facilities.

The speed of developments has surprised some and a quick deal could help Wyevale by deflecting from its 2014 annual results due in early July. Wyevale turned over £290m according to latest figures and has since grown to 153 centres.

Wyevale's immediate parent undertaking is Carmel Capital VII, a company registered in Luxembourg. It is owned by TFCP Investments (GP) 3, as general partner of the Terra Firma Capital Partners III LP. The company's ultimate parent undertaking is Terra Firma Holdings, registered in Guernsey, and the directors consider Guy Hands to be the ultimate controlling party.

Consultant Neville Stein said: "I think some quick wins for Wyevale if they get Dobbies would be to introduce catering concessions such as Costa Coffee and, as they have done at other sizeable centres, introduce further concessions such as Brantano, Mountain Warehouse, etc.

"Cost savings will be made by merging two head offices and further purchasing economies of scale can be capitalised upon as they will have even more purchasing power in the marketplace. Clearly if you are a supplier to Wyevale but not to Dobbies then this should be excellent news.

He added: "I would suggest that as Wyevale do not have a presence in Scotland they would see this acquisition as providing loads of opportunities particularity for their loyalty programme, which already is very effective but could now have truly national reach."

Consultant Doug Stewart pointed out: "Buying Dobbies will make Wyevale a truly national chain. Wyevale is more interested in market share than anything else and buying Dobbies buys them market share. I don't think they will make huge changes apart from adding franchises, which Dobbies is light on. The greatest threat is that Homebase's buyers Wesfarmers are going to shake up the market. They have got to be looking at buying Dobbies too."

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