Hunter fails to block Dobbies rights issue

Interim interdict refused as judge declines to interfere in "commercial tussle"

News, 16 May 2008

Scottish millionaire Sir Tom Hunter yesterday failed in his attempt to block Tesco's plans for a £150 million rights issue in the Dobbies Garden Centre chain, in which the supermarket giant holds a 65% stake.

Sir Tom, who holds a 29.9% stake and last year lost out to Tesco in the attempt to gain control of Tesco, had asked the Court of Session to grant interim interdict to stop the one-for-one shares offer going ahead, claiming that the ulterior motive was to dilute his own holding in order to give Tesco full control of Dobbies. The entrepreneur, who has a personal fortune of just over £1 billion, would have to find £44 million to take up his rights in full.

Refusing the interim order, Lord Glennie noted that Sir Tom's investment company West Coast Capital also had a major holding in Wyevale Garden Centres, a competitor of Dobbies, and expressed the view that granting interdict would interfere with Dobbies' ability to compete with others including Wyevale. "This court should not be used to further the interest of one or other party in a commercial tussle", he stated.

Lord Glennie said that West Coast Capital had failed to show a prima facie case against Dobbies and in any event the balance of convenience strongly favoured refusing interim interdict. He expressed the view that the most intelligent course of action would be for Tesco to buy out West Coast's holding.

After the ruling both sides indicated their willingness to continue talks, though both Tesco and West Coast have made offers for the other's holdings. West Coast also reserved its position as regards further proceedings.