SCOTLAND'S richest man last night vowed to fight on after losing a bitter legal battle against Tesco chief executive Sir Terry Leahy.
Sir Tom Hunter, who boasts a fortune of more than £1 billion and a business portfolio including sports shops and housebuilding firms, was refused a court interdict, which could result in the supermarket giant taking full control of Scottish garden ce
ntre chain Dobbies.
Judge Lord Glennie yesterday said he would not grant Sir Tom's application to block an "open offer" share issue proposed by Tesco, which the retailer claims was to raise cash for the expansion of Dobbies.
Now Sir Tom's West Coast Capital (WCC) investment vehicle may lose its blocking stake in the Edinburgh-headquartered garden firm when majority shareholder Tesco pushes through the proposal to raise £150 million from shareholders at the company's annual general meeting next week.
Sir Tom, whose garden centre interests also include rival chain Wyevale and Blooms of Bressingham, yesterday vowed to fight the judgment at Edinburgh's Court of Session, saying he would "continue down the legal process" if an agreement with Tesco could not be reached before the meeting on Wednesday.
Relations between the Tesco-appointed directors on Dobbies' board and Sir Tom have been strained since the Scottish tycoon refused to give up his 29 per cent stake in the firm when the remainder of Dobbies' share capital was snapped up by the supermarket giant in a £155.6 million deal last summer.
Under the terms of the share issue "open offer", Sir Tom would have to find an additional £44 million to retain his existing stake in the firm after the issue of an extra 12.5 million new shares on to London's junior stock market, Aim. If he decides not to do so, the shares – and full control of the company – will automatically go to Tesco, as the underwriter of the deal. Tesco's current 65 per cent stake would also increase to 84 per cent – past the key 75 per cent mark which would allow it to de-list from the stock market.
In an angry war of words at Edinburgh's Court of Session earlier this week, the two sides threw bitter accusations at each other of ulterior commercial motives for their actions.
Ewan Hunter, a spokesman for Sir Tom, yesterday told The Scotsman that taking up the share offer remained an option for WCC. He added in a statement: "We respect Lord Glennie's interim judgment. It is our intention to speak to Tesco's in order to seek a fair solution for all 300 shareholders, many of whom have written to us unsolicited in support of our actions. Should a fair resolution not be forthcoming, we reserve our right to continue down the legal process."
He also revealed that WCC had recently offered Tesco £12 a share for its stake in Dobbies, after Tesco had made the same offer to WCC for its shares.
In his ruling, Lord Glennie said he believed that a continuing partnership between Dobbies and WCC was untenable.
He said: "It seems to me that the grant of interdict would simply prolong the battles between the parties in circumstances where even WCC recognise that the relationship within the company cannot continue."
Aside from Sir Tom, there are about 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.
Experts welcomed the ruling, saying Sir Tom's potential departure from the business could be beneficial for Dobbies.
John Henderson, the director of investment firm Rathbone's in Edinburgh, said: "It does suggest a degree of a conflict of interest for Tom Hunter as a blocker of Dobbies and also owner of Wyevale. It would seem difficult for him to manage that without bias."
Trevor Datson, spokesman for Tesco, said the firm was awaiting WCC's next move. He said: "This is good news for Dobbies and will allow them to get on with what they are good at – running garden centres – rather than fighting legal cases.
"We have always been open to talk to WCC. We will have to see what they come back with."
Dobbies has about £110 million in debt, but is looking for the extra funding to expand the group beyond its current 23 sites, which are split between Scotland and England.
But while planning the majority of its expansion through brand new sites in England, James Barnes, the chief executive, said the firm would not rule out the acquisition of chains such as Sir Tom's Wyevale.
The full article contains 770 words and appears in The Scotsman newspaper.
