THE long-running battle between Sir Tom Hunter and Tesco chief executive Sir Terry Leahy over control of Dobbies is set to be joined in court next week, it emerged last night.
Scotland's most successful entrepreneur will go head-to-head with one of UK's most high-profile business leaders in the increasingly bitter dispute over the future of the thriving garden centre business.
Hunter yesterday instructed lawyers to ask
a judge to issue an interim interdict to block Dobbies' plans for a £150 million "open offer" share issue in the company, in which Tesco's has a 65 per cent stake.
Scotland's richest man currently owns just under 30 per cent of Dobbies.
The rights issue would force him either to dilute his holding or buy more shares if he is to retain his veto over Tesco's plans to take the company private.
The Ayrshire billionaire's investment company, West Coast Capital (WCC), has instructed lawyers McGrigors to seek the blocking order and the issue is due to come before a court in Edinburgh on Monday.
Last night neither side was prepared to discuss the action, but an interdict can be granted if a company is found to be acting to the detriment of shareholders' interests.
Commenting on the shares issue plans, Ewan Hunter, Hunter's spokesman said: "We do not believe this open offer is in the interest of shareholders and in particular minority shareholders full stop."
Dobbies has scheduled an AGM for 21 May to approve the rights issue, although as Tesco owns more shares than are needed to get the go-ahead for the issue, the outcome is a foregone conclusion.
Aside from Hunter, there are around 300 private shareholders who collectively own just over 5 per cent of the company, as they did not take up Tesco's £15 per share bid for the group last year.
Last night the increased bitterness in the fight over the garden centre business became clear with sources close to Tesco accusing Hunter of "attempting to undermine Dobbies" in favour of garden centre rivals, Wyvale and Bloomers, which Hunter owns.
In public, however, James Barnes, chief executive of Dobbies Garden Centres, played down the effect on Dobbies' customers, but admitted the court action would a be a "distraction".
Barnes said: "We'd like to get this thing heard and sorted as soon as we can to allow us to focus on the business at what is our key time of year."
With a 29.9 per cent stake, WCC is Dobbies' second-largest shareholder. Tesco owns 65 per cent of the business after a £155m takeover deal last year.
It is believed that Hunter has been upset by Dobbies's decision to cut its dividends to shareholders so that the group could deal with its £100m debt.
According to Barnes this was a temporary measure. "The policy is to review the dividend on an annual basis. That is not an indefinite situation by any means."
In a statement to the stock exchange, Dobbies said it intended to "present a robust defence of its strategy" at the court hearing.
If Dobbies is successful in issuing the new shares, Hunter would be forced to cough up £44m to maintain his 29.8 per cent stake. If Hunter does not increase his stake, Tesco's 65 per cent holding could rise to around 84 per cent. That would deprive Hunter of his bargaining chip and allow Tesco to delist the garden centre company.
Hunter has been digging into the garden centre sector since he bought Wyvale in 2006 for £310m and Blooms of Bressingham which he snapped up last year for £30.2m.
The full article contains 611 words and appears in The Scotsman newspaper.
