Dobbies Garden Centres Share Discussion Threads

[gengulphus] 16/6/2007 07:57

I think shares sold at the moment are much more likely to end up in Tom Hunter's hands than Tesco's. In particular, rule 6.2 of the Takeover Code says that if Tesco pays more than 1500p for any shares now, they are obliged to raise their offer to at least the price they pay. On the other hand, as far as I am aware, Tom Hunter is free to buy just the shares he wants - and has already demonstrated that he is willing to pay 1750p/share. He only becomes restricted by the price he pays if he then tries to take over the company himself, either voluntarily or compulsorily if he goes over 30% of the shares - in that case, he has to offer at least the highest price he pays.

It will be interesting to see what Tom Hunter does! Making an offer himself (which would have to be at least 1750p) and just trying to acquire a 25% blocking stake both look like interesting options for him...

Gengulphus

[tuffbet] 15/6/2007 22:18

loafofbread
Still on hols so shouldn't be here hence very brief response. Thanks for compliment.

Hope you won't take this the wrong way but because ever investor is so different in every respect ie temperament, time horizon,depth of pocket, patience I don't think it's a good idea to exchange trading ideas. A stock or trade that's right for me could be so wrong for you and vice versa and you don't know what my motives are which could be on occasion contrary to your best interests.

More often that not I post just as an antidote to the majority of stuff I see which I think is dangerous reading for the inexperienced and sometimes I post out of frustration with either myself or the markets -so I don't take anything I write very seriously and I don't want any one else to either - best of luck keep doing your own research.

On the more intersting subject of DGC and the bid ,like everyone else I have no way of knowing how this is going to end up but I would like to see private investors saya to TH ...look if you need more shares to counter the Tesco bid you can have mine

- silly as it is one of the reasons I don't want to sell any is that I hate the thought of them ending up in Tesco's hands. I am not a big fan at all of out of town malls,large supermarkets etc and prefer to spend my money supporting local shops and farmers whenever I can even if it costs me money - it's a sacrifice I am more than happy to make because some things like talking to the owner of a local shop about his wife's health etc you can't put a value on. Sorry starting to pontificate so will shut up and go.

My best guess is this should go higher based on two determined adersaries with deep pockets but who knows I have no more than a 50:50 chance of being right and that's not good odds.

Back to the hills,the midges,the heather and the weather and to ponder why, for some,instant gratification is not soon enough.

[bigbertie] 15/6/2007 10:54

There have been more sells at 1775p - Sir Tom could be close to the 25% he needs to make life hard for Tesco. is there a chance he could walk away then and leave the situation unresolved? And might Tesco decide to withdraw their offer? I think Tesco are meeting today to decide what to do....exciting times. My own opinion is that these two both want it so much that we will see a bid very soon worth at least 1,775p but just IMHO of course.

[bigbertie] 14/6/2007 15:37

loaf - re Blacks I forgot to add Sports Direct (Mike Ashley) has 29% stake.

[loafofbread] 14/6/2007 10:50

tuffbet,

Excellent posts.

Do you have any other stocks where you think the landbank/freehold or retail space is being under valued. If so very interested to read your views.

Thanks.

[tuffbet] 14/6/2007 10:43

bigbertie and others

Pleasant surprize this morning - -weather bad so put off hike and went to local library out here in the sticks to see what was going on in the markets- told my wife I was going down to read the papers etc!. No Java on PC so couldn't get monitor up to see prices ,flicked over to BB to see graph there and up came highish £17's - - thought there was a mistake.

Anyway am and am not surprized .If anyone has bothered to read anything I have posted before on DGC they will see that I think garden centrers in general are big growth areas in retail - possibly the biggest, so the fact that there is now a "hunt" on for them does not surprize me nor for reasons outlined previously does it surprize me that TH isn't going to let this go without a big fight.

I was fortunate enough to top up rather than sell after the bid announcement . Taking a profit at that level just wasn't for me a sensible option but now probably like other posters on here I am thinking ,take some profit,buy more or sit tight? ie the decision making process is getting harder ,not easier.

Will go off into the heather and the midges and think it over - in the meantime I hope all the patient posters on here make the right decision which will by definition be different for each of us as we have come in at different levels.

[bigbertie] 14/6/2007 10:43

loaf, we should be on a Blacks thread, but briefly:
(1) price plunged after a poor year last year (one-off sales problems & costs)
(2) results this year should be much better as last year hit by exceptional costs of new distribution system and closure costs for 45 loss-making stores
(3) outdoor & leisurewear markets are strong and has some good brands
(4) CEO resigned, so power vacuum / chance to hire a heavyweight
(5) big shareholders have recently addeed, most interestingly Intrinsic Value
(6) I think most property leased, but price to book ratio is only 1.0 and ther is practically no debt
(7) strategic review of options for Freespirit chain
Against all this, margins this spring will probably have fallen due to stock clearance, so first half may be weak. Just my personal feelings - no recommendation intended. DYOR of course

[loafofbread] 14/6/2007 09:39

Big,

Please give us a run down of why Blacks is a fair target? Is it all freehold property etc?

[bigbertie] 14/6/2007 08:46

Wow - beyond my highest hopes - nice surprise for tuffbet when he checks in again. I recently bought into Blacks Leisure in the hope that the same will happen there - perhaps Sir Tom will take up hiking as well as gardening.

[wahlenm] 14/6/2007 08:06

Thanks. This means that any Hunter bid has to be at a minimum of £17.50 for the next 6 months

[wahlenm] 14/6/2007 07:28

no announcement but up over £2. Anyone know whats going on?

[maverick1066] 14/6/2007 07:06

Yeeeeeeeeeeeeeeeeeeeeeehaaaaaaaaaaaaaaaa!!!

Oh Happy Days!!!!!


Mav

[tuffbet] 12/6/2007 11:38

bigbertie

shouldn't be doing this but logged in from library on trip to see what is happening - still looks to me like this will be contested higher but as a shareholder maybe that' reflects wishfull thinking.

From what I have read in the press everyone thinks it a brilliant move by Tesco so if it's so brilliant for Tesco they would be prepared to pay much more I am sure.

Was in Aviemore area last few days absolutely fabulous

[bigbertie] 11/6/2007 07:35

tuffbet - have a good hike - I went last week (Cairngorms) and the market plunged while I was away! I hope Hunter gets his act together while you are away - he'll need to move fast. cheers

[tuffbet] 11/6/2007 07:23

going hiking for a week this morning so will be interesting to see how things have developed when I return - have a gut feeling this will develop into a bidding war.

As I see it with his other garden centre interests getting Dobbies and for the moment keeping Tesco out his market must be strategically very important to TH - if he loses then it's inevitable, barring a monopolies intervention, that he will eventually sell out all his interests in garden centres at some future date to Tesco.

If a bidding war develops and he forces DGC's price up then he at least has some compensation for the fact that the market dominator,once it gets Dobbies, will put his existing margins under huge pressure and will eventually gobble him up.

[wahlenm] 10/6/2007 19:58

Thanks for the additional information. There are lots of small shareholders in this company, most of whom do not bother to vote. In view of this I think a scheme of arrangement is almost guaranteed to succeed. I was a shareholder in a company which was taken over and delisted. Two shareholders with more than 10% of the shares refused to sell. About a year later they sold out at a much higher price.
I cannot work out why Tesco have not gone straight for a scheme of arrangement. Any views?

[gengulphus] 10/6/2007 16:06

Yes, a shareholder with 10%+ of the shares can block a takeover - and to be precise, they only need 10% of the shares that the bidder does not already own when they make the bid. (E.g. if the bidder already owns 5% of the shares, they only need 9.5% of the shares.)

If the 10%+ shareholder has got less than 25% of the shares and the bidder gets 75%+ of the shares, though, the bidder has a significant weapon in the form of being able to delist the shares - basically telling the 10%+ shareholder "Accept the offer or get locked into being a minority shareholder in an unlisted company."

However, the announcement also says:

"Tesco Holdings reserves the right, with the consent of Dobbies, to elect to
implement the acquisition of the Dobbies Shares by way of a scheme of
arrangement under section 425 of the Companies Act 1985. In such event, the
scheme of arrangement will be implemented on the same terms (subject to
appropriate amendments), so far as applicable, as those which would apply to the
Offer. In particular, condition (a) will not apply and the scheme of arrangement
will become effective and binding following:

(a) approval at the court meeting (or any adjournment thereof) by
a majority in number of the Dobbies Shareholders present and voting, either in
person or by proxy, representing 75 per cent. or more in value of the Dobbies
Shares held by such holders;
..."

A scheme of arrangement is an alternative to a normal takeover and can be pushed through with only 75% of the shares voting in favour plus court approval. So Tom Hunter cannot necessarily block the Tesco bid.

By the way, I notice an AFX report that he is trying to organise a counter-bid: . Things could get interesting if that happens!

Gengulphus

[wahlenm] 08/6/2007 19:25

I believe that whoever buys Dobbies can only force all
shareholders to accept their offer, if they have acceptances for more than 90% of the shares. This means Tom Hunter with his 10.6% can prevent all the shares being mopped up and remain a minority shareholder. Tescos could only get rid of him if they make an offer that he will accept. A large number of shares changed hands today at above the offer price. Who can it be?

[tuffbet] 08/6/2007 11:59

darrin1471

thanks for that valuable post it's always good to get an informed view from the "inside"

My only experience of garden centres is as a shopper and because I hold shares in Dobbies as an interested prowler to see how the seemed to be doing. I can therefore only speak in respect of my experiences at Dobbies but they seem to accord very much with yours in that I got the impression it was a very well run business.

Don't like to agreee with everything but if Tesco's do get Dobbies then I think you are right re the others haing to pull up their socks - there will still I think be a place for the small local nurseries but those at the higher end and in the middle ground could disappear .

[darrin1471] 08/6/2007 10:42

I was a supplier to Dobbies and Wyevale between 2000 and 2005 and have visited most of their garden centres during that period. If Tesco wanted the land then they should of bought Wyevale. I think the opposite is likely to happen. Tesco will use their land bank to build garden centres. There is a lot less NIMBY opposition to a nice green garden centre where you can have a coffee than a noisy messy supermarket.
The garden centre owners and suppliers should be quaking in their wellington boots. Garden centres like convenience stores are badly run and inefficient when compared to the supermarkets. Dobbies was one of the best run, Wyevale one of the worst. In five years supplying garden centres I was only twice asked for a discount off my list price.

[tuffbet] 08/6/2007 08:40

wahlenm
just seen your post after I posted mine - agree if they get Dobbies then building out the empire will continue down the route you suggest I would like to see Dobbie's shareholders stand up and say..." no if you want this business which clearly you think is well run, asset rich and cash generative, then you will have to dig a little deeper into those very deep pockets and come up with a knock out offer

Shareholdes should remember that they , not the directors own the business, it's almost always in the directors personal interests to accept a decent order which makes them wealthy enough that a few more millions doesn't really matter so the shareholders should not take their acceptance as any sort of guide to whether this offer is a fair value for the business.

[tuffbet] 08/6/2007 08:32

Tesco don't appear to have a significant holding yet so there must be a good chance this will be contested higher.

£155 million is chickenfeed to Tesco and if they really want it my guess is they would not baulk at paying a good deal more and this therfore may just be a sighting shot or an effort to flush out shareholdes who are prepared to take £15 now because they think it will be uncontested.

I f you read what Tesco have to say about Dobbie's business it's just what I have been saying all along in terms of correct strategy, silver haired but cash rich client bank "green" credentials etc. All of that is worth a lot to Tesco but the propery and land bank is the icing on the cake and what a lot of icing that is.

As I said above I will be very disappointed if shareholders accept £15 I would rather stay with the company and look for a much higher bid further down the line.

Any other views?

[wahlenm] 08/6/2007 08:28

I agree that Tesco will want to turn them into supermarkets. Retaining the Dobbies name makes the connection with supermarkets more obtuse.
There are lots of small shareholders so it is not a done deal. I suspect that Tescos will be after Wyevale next because of the potential to turn their sites into supermarkets

[tuffbet] 08/6/2007 07:51

Well there we are £15 per share.

Must say I am disappointed with that and also must confess I never thought of Tesco as the bidder. Personally I think it's a stael for them at that price especially as they must be after the property and land bank and the value to them must be very very high given problems in acquiring both plus building/planning permission.

Haven't had time to look at details yet ,assume they don't have enough shares to make it fait accompli so TH etc may yet spike their guns or drive the price higher