Grocer makes shock move into garden centres
Britain's biggest supermarket Tesco has made a£155.6 million offer for Dobbies Garden Centres, at a price of 1,500p-per-share in cash.

The retailer said that it intends to fulfil customers' green aspirations through the garden centre market. Dobbies will retain its own brand and head office in Scotland.

Dobbies chairman Alex Hammond-Chambers said: 'We are recommending the Tesco offer because we feel it is an excellent deal for Dobbies shareholders, customers and staff and because a stronger and better business can be built as part of the Tesco group.'

Tesco chief executive Sir Terry Leahy said: 'The increasing popularity of gardening and 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 a proven track record of growing businesses, product innovation and improving our offer to customers internationally.'

Hammond-Chambers added: 'This deal will allow our Scottish success story to grow, bringing new stores and exciting new products across the UK. Together, we can develop our store portfolio, supply chain, systems and online business and, over time, offer customers a wider range of products at keener prices.'

Tesco said it believes Dobbies has the best garden centre business model in the UK. It feels the acquisition, though small, will be value-accretive, with returns exceeding Tesco's cost of capital after year three, as the operational benefits and synergies of the combination are delivered. The retailer added that the purchase will also create a significant number of jobs.

As a first step, Tesco has signed to acquire a 22.6 per cent stake in Dobbies and has received firm commitments from the board for a further 2.7 per cent.