Property entrepreneur Tom Hunter’s investment vehicle West Coast Capital has abandoned its bid for garden centre Dobbies, leaving UK supermarket Tesco in pole position to acquire the company with its £228 million (€337 million; $461 million) bid.
However, the supermarket’s £15 per share bid is still likely to face resistance from West Coast. Hunter’s company has a 26 percent stake in the garden centre and paid up to £18.45 for some of these shares – a premium of 23 percent to the Tesco offer price.
It said in a statement: “West Coast Capital continues to believe that the Tesco offer does not reflect the long term value potential of Dobbies, as is demonstrated by its acquisition of shares significantly in excess of the Tesco offer price. As the board of West Coast Capital does not consider that the Tesco offer reflects the true value of Dobbies, it will not be accepting it.”
The buyout firm criticised Dobbies’ board for not running a more competitive bidding process to maximise value for shareholders.
Hunter had been issued with a “put up or shut up” ruling on Monday, requiring him to submit an offer by 17:00 BST on Thursday or be barred from bidding for six months.
Tesco needs a 50 percent stake in the company for its bid to succeed in the next two weeks. It has currently received acceptances equating to 32.6 percent of the shares.