Tesco bid for Dobbies chain will speed up market consolidation

Potential takeover could trigger change in retail market.

The garden industry is set to be transformed after retail giant Tesco had a £155.6m bid accepted for Dobbies Garden Centres last week. Dobbies’ board of directors recommended its shareholders accept the surprise offer of Tesco, which owns 25 per cent of its shares. Dobbies chief executive James Barnes has 670,000 shares worth £10.05m, while operations director Johnny Trotter has 218,200 shares worth £3m. If the sale proceeds, it is likely to transform the garden retail sector and accelerate a long-predicted market consolidation. It will be the first time a large corporate company has entered the market and any venture would have to go head-to-head with Wyevale. The move would potentially split the market into four — two dominant chains, a handful of smaller multi-chain groups, and hundreds of independent stores of various sizes. Scottish entrepreneur Sir Tom Hunter’s investment vehicle West Coast Capital (WCC), which has bought 118 Wyevale and Blooms centres in the past year, owns 10.6 per cent of Dobbies shares and seemed set to make a bid. Private equity company Apax Partners was also a takeover candidate. A WCC representative said “all our options remain open”. Such options include a counter-bid for Dobbies in alliance with a rival supermarket to Tesco. Dobbies chairman Alex Hammond-Chambers said the deal would enable Dobbies to share Tesco’s expertise and create a stronger and better business. Tesco plans to “grasp the opportunities” Dobbies offered by moving into greener products. Tesco chief executive Sir Terry Leahy said the garden centre sector was attractive because of gardening’s increasing popularity and the trend towards environmentally friendly products. He added: “The deal is an important part of our strategy to provide customers with greater access to affordable energy saving and environmental products.” HTA director general David Gwyther said: “We may well be witnessing the beginning of a substantial step change in the structure of the UK garden retail industry. If so, this will have a substantial effect on the supply side as well.” Garden writer Peter Seabrook said independent centres would continue to lead the way in the industry.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Sign up now
Already registered?
Sign in
Follow us on:
  • Facebook
  • LinkedIn
  • Twitter
  • Google +
Horticulture Jobs
More Horticulture Jobs

Are you a landscape supplier?

Horticulture Week Landscape Project Leads

If so, you should be receiving our new service for Horticulture Week subscribers delivering landscape project leads from live, approved, planning applications across the UK.