LONDON: British retail chain Tesco Plc has agreed to acquire Dobbies Garden Centres Plc., for 155.6 million pounds in a cash and share offer. The acquisition will mark Tesco's entry into gardening.
The company is paying 1,500 pence a share, which is a premium of 23.2 per cent over Dobbies' closing price on 30 May when it announced it had received an offer.
Tesco said the deal will expand its portfolio into environment-friendly products like solar panel heating and water management devices. It added the deal also provides a new source of growth for it.
Dobbies is Britain's third largest garden center chain with 21 stores in England and Scotland.
Sir Terry Leahy, chief executive of Tesco, said Dobbies is an excellent business with a first class management team and a great brand that the company will retain and develop from its Scottish base.
He added garden centers are an attractive proposition for Tesco to invest in in view of the increasing emphasis on environment-friendly products.
The firm expects the acquisition to be value accretive, with return exceeding the cost of capital after the third year.
Dobbies' chairman Alex Hammond-Chambers said the company's board is recommending the offer as it is an excellent deal for the shareholders, customers and staff.
The firm will retain its head office in Midlothian.
