Dobbies Garden Centres Share Discussion Threads

[darrin1471] 21/6/2007 08:59

Wyevale is a potential goldmine as it was a shambles when I was a supplier to them two years ago. A shambles in their controls, merchandising and estate.
Dobbies are years ahead of Wyevale.
The value in Dobbies is the formula it has and the ability to to refine and reproduce it across the country. I doubt Dobbies management is strong or big enough to replicate its success in Wyevale. Management usually has enough share options to walk away a few years after a takeover.
I can't see a combined Dobbies and Wyevale having much more buying power. It is difficult for me to see how Hunter could get a good medium term return on a £18.50 takeover.
I therefore have to see Hunters move as a blocking move. If the bidder was not Tesco's then we could of expected cries of anti competitive behavior. Tesco's may decide to up their bid or they could poach the management team and set up a new company based in Edinburgh.
Hunter could also want a stake in the Tesco's/Dobbies business. A high price for Dobbies may increase the value of Hunters other garden centres. Hunter may like to sell his Dobbies stake along with some or all of the Wyevale sites to Tesco.

It is interesting wider battle which may take many years to produce a winner

[sagem] 21/6/2007 08:24

As I said this in my post above....Also HUNTER does not want that kind of competition within the Garden Centre set up so he may even out bid Tesco and take DOBBIES into his empire.

Daily Mail Thursday June 21st state that IT IS THOUGHT THAT HUNTER PLANS TO LAUNCH
A BID OF HIS OWN TO EXPAND HIS GARDEN CENTRES EMPIRE, WHICH INCLUDES WYEVALE.......(THIS IS EXACTLY WHAT I SAID) SAGEM.

[spongman] 20/6/2007 22:00

but why Sagem? u making up Numbers?

[sagem] 20/6/2007 21:58

As I said in my post Tesco's growth is flagging, they are finding it difficult to progress with their own stores selling what they sell. GARDEN centres are a whole new ball game and would give Tesco the opportunity to extend their growth, Garden Centres have a very big catchment area and have not used their potential fully......TESCO WOULD DO JUST THAT AND THATS WHY THEY WILL PAY POSSIBLY £20 PER SHARE. Also HUNTER does not want that kind of competition within the Garden Centre set up so he may even out bid Tesco and take DOBBIES into his empire.

[wahlenm] 20/6/2007 20:37

My post number 35 in which I suggest that TH might want to dispose of his holding in DGC and sell Wyevale to Tesco. I could never understand why TH bought Blooms when I was sure he would go for Dobbies first. It occurred to me today that he had identified tesco as a possible suitor for Dobbies so went for Blooms first. This is because he guessed Tesco would not interfere as they did not want to disclose that they were interested in entering this market and thus bid up Dobbies. Buying Blooms improved the viability of the enlarged Wyevale and also made it more attractive to Tesco. Any thoughts?

[wahlenm] 20/6/2007 20:27

spongman
Why would anyone accept Tesco offer of £15.00 when they can get £18 odd in the market?
SAGEM Are you going to buy any shares at £18.50? I bought 500 to add to my holding earlier today.

[sagem] 20/6/2007 19:42

TESCO WOULD PAY £20.00 PER SHARE. They need this Garden Centre badly as their growth in the retail centre is flagging....their potential in Garden Centres is huge and a whole new ball game for them......THEY WILL PAY £20 AND TESCO ARE NOT SHORT OF CASH. HUNTER will just have to find more money which he can do with the consortium at the back of him. A WAR IS ABOUT TO BREAK OUT.

[spongman] 20/6/2007 19:00

Gents,

Offer document now states only 50 per cent take-up required.

What now? TH keeps buying or does this smoke out a bid? TSCO already get about 1.5Mil compo if DGC pull out and they still seem to be backing TSCO Bid. Where does other 50% lie? is it possible they already have enough pledges?

Still think the final bid could be below here even if it gets upped.

AIMHO. Please DYOR as I know nothing but would welcome your comments on the above.

TIA
Regrds
$pong

[wahlenm] 20/6/2007 18:38

SWalker
Please can you tell me where the rumour reported that Tesco will offer £20?

[swalker] 20/6/2007 16:51

Well, two more purchases today:

102,500 at 1845p (raising to 22.42%) and just after the close:

315,783 at 1845p (taking Hunter to 25.57%)

So, Tesco are now technically blocked.

I see the rumour doing the rounds is that Tesco will offer £20.

Now things get really interesting.

[gengulphus] 20/6/2007 12:30

Well, there is the alternative that they are not on speaking terms with each other! ;-)

Gengulphus

[wahlenm] 20/6/2007 08:57

Tesco announced yesterday that the paperwork for its offer for Dobbies was about to be issued to shareholders. I am not so sure. It should have been issued days ago. The announcement last night that TH has increased his stake to 21.4% improves his chance of blocking Tesco and his negotiating position at the same time. Dobbies shareprice up again this morning. Surely the are talking to each other. Any other views?

[bigbertie] 19/6/2007 18:53

SAGEM - this is old stuff. At the current price of nearly 1,800p Dobbies enterprise value is nearly £230m (180m mkt cap plus about 50m debt) but its net assets are only about 40m. So if property freeholds are undervalued by 20m the present share price is still well above the true valuation. Your numbers look out of date (it's some time since WCC had only 3.7%) but even if the undervaluation were double that, ie 40m, the current share price is still at a huge premium! I'm not complaining of course.

[wahlenm] 19/6/2007 18:40

This is old news. The last accounts show property worth about £100M.
TH now holds 21.4% of the shares.

[sagem] 19/6/2007 18:03

ARE YOU AWARE THAT IF YOU HOLD DOBBIES GARDEN CENTRES SHARES YOUR INVESTMENT IS WORTH A LOT MORE THAN YOU THINK INCLUDINMG THE CITY ;-

DOBBIES GARDEN CENTRES (DGC)

Bid speculation has been flourishing around Dobbies Garden Centres since entrepreneur Tom Hunter's West Coast Capital vehicle recently bought a 3.7 per cent stake. And it's easy to see why private equity buyers find Dobbies attractive. The group owns all its property, but holds it at cost. So while Dobbies' freeholds are in the books at £85m, analysts reckon their market value could be £20m more than this.

[tuffbet] 19/6/2007 14:37

Good programme last night on More4 re the serious negative impact supermarkets are having on the farming community in Devon and Cornwall - basically they are all going out of business and if things continue as they are all our food will soon be imported.

Funnily enough was talking to two farmers in the North of Scotland and their stories were almost identical to that on the TV programme ie getting around 17p per litre from the supermarkets for their milk production which for most is now loss making so they see little or no future in farming. As one of them said to me .." cheap seems to be all people want today, quality and sustainability aren't of interest to most people who seem to busy to even think about the implications of not buying locally - when we go all your meat and milk will either be from intensive farming in huge purpose built farms or imported from similar hell holes abroad "

Makes you wonder what might happen to UK crops and flowers etc if the supermarkets step into Dobbies space.

[tuffbet] 18/6/2007 08:49

Walking in peace and quiet does help the brain focus and mulling things over I came to the same conclusion as you wahlenm ie if TH wants to maximize his strategic position it seems logical that he should be negotiating with Tesco to throw in his hand on DGC at say £20 ps or more but only if they also buy Wyevale.

I think he is too shrewd to think he can compete against a Tesco in his market place and therefore he either has to get enough shares to frustrate Tesco's attempt on DGC or negotiate out everything he has in the sector if he can't block their Dobbie's bid.

Either way that doesn't seem a bad position to be in for DGC existing shareholders but I've learned not to be surprized by anything.

Good posts wahlenm and Gengulphus valuable contributions

[wahlenm] 16/6/2007 22:11

Genglephus

I think we agree. I should like to be crystal clear on one point. I think that delisting can only take place if 75% of the votes in issue ( not votes cast )are held by Tesco. This makes it almost impossible to delist with TH holding 20.6% due to shareholder apathy
I also think that if Tesco proceed with a takeover based on 50.01% acceptances they will make a fresh offer to those who do not accept when they are free to do so ( this could be at a better or worse price )

[gengulphus] 16/6/2007 18:33

Yes, if Tesco choose to do it by a scheme of arrangement (see the introductory paragraph to that (a)(b)(c) list). Schemes of arrangement always involve getting a 75% vote in favour, measured as a percentage of those who actually vote.

The ordinary takeover route that the scheme of arrangement is an alternative to does not involve a vote, just people accepting the offer or not. That route has an acceptance condition (Appendix 1, point 1(a)) of "not less than 75 per cent (or such lower percentage as Tesco Holdings may decide)" - which means that Tesco could decide to proceed on less than 75% acceptances if they choose that route. On the other hand, they would probably then want to delist the company, which is another of those things that involves winning a 75% majority vote... I suspect that small shareholders would be quite strongly motivated to vote against delisting proposals!

Also, even if they did manage to delist the company, using the ordinary takeover route Tesco wouldn't be able to get to the point of being able to compulsorily acquire the remaining shares without persuading Tom Hunter to accept, since that requires them to get acceptances for 90% of the shares they didn't already control at the start of the offer.

By the way, those who are not directly on the shareholder register can see the documents that were posted to those who are at .

Gengulphus

[wahlenm] 16/6/2007 13:28

Gengulphus

Thanks for post. You appear to hold shares in your own name in which case you will have received details in the post about the offer. May I refer you to Page 12 of this document para 17 sub para a.
I read this as Tesco needing 75% of votes cast. TH will be voting his 20.6% against. This indicates that tesco needs 3 x 20.6 to get it through That is 61.8% of possible votes. ( 61.8% is 75% of 82.4%)It also means that for every extra vote against the scheme of arrangement Tesco need 3. Do you agree?

[gengulphus] 16/6/2007 12:28

wahlenm,

The Takeover Panel's website:

And in particular, the "The Code" link on it. It's a big document, and I don't know more than small parts of it - but I've had enough exposure to it by now to get some of the general flavour. The "GENERAL PRINCIPLES" section after the introduction is short (1 page) and worth absorbing - for example, general principle 1's bit about "equivalent treatment" of all shareholders is what lies behind the rule that if the offeror buys shares at above the offer price, they must raise the offer to the price paid. Otherwise, an offeror could make an offer at a low price, then selectively buy at a higher price from the shareholders they really have to persuade to ensure the offer's success. Similarly, the rule that would oblige Tom Hunter to pay at least 1750p in any offer he makes is there to prevent an offeror doing the selective buying before actually making the offer.

I agree about the "voter apathy" effect - I try to be quite an active voter myself, but still regularly find AGM proxy forms that I've put aside to be dealt with later and that are now out-of-date! I don't generally let that happen for more significant votes though...

And yes, it's a potential obstacle to Tesco - by now, if they try the "scheme of arrangement" route, they need to get at least 4*20.6% = 82.4% of the votes to be cast to have any hope of getting past Tom Hunter voting against it, and they probably need significantly more than that because there will be other votes against it by people who agree with tuffbet about the company getting into Tesco's hands... Still, if I were Tom Hunter, I would be fairly keen to improve my negotiating position further by buying a few more!

Thanks for the interesting thoughts about the negotiations that might be going on behind the scenes!

Gengulphus

[bigbertie] 16/6/2007 10:24

wahlenm - sale of Wyevale to Tesco, now there is a possibility I hadn't thought of. Tesco and Sir Tom must be having an interesting weekend.

And just in case Sir Tom does sell out, I can't imagine he will retire! So maybe we should start speculating about his next interest?

[wahlenm] 16/6/2007 09:47

Gengulphus.
You seem to know the rules better than any of us. Can you point us all to a website with them on?
I think that both parties know that the large number of small shareholders are the key. Tom Hunter does not have to have 25% of the shares in issue (10 million) to block a bid but Tesco needs 75% of the votes in issue. Small shareholders do not understand much of the stuff that falls through the letterbox in this sort of situation. They certainly do not exercise their right to vote and if they are in nominee accounts they often dont even have a clue that anything is going on. Effectively many abstain which favours TH rather than Tesco. I suspect there is some hard bargaining going on which could see TH sell wyevale to Tesco. The other alternative is for Tesco to put in a knock out bid.