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Tesco (TSCO) has sold Dobbies Garden Centres to an investor group led by Midlothian Capital Partners and Hattington Capital for £217m in cash as its non-core sell-off continues.
It comes a week after the supermarket agreed to offload the Giraffe restaurant chain to Ranjit Boparan and its Kipa business in Turkey to Migros.
Tesco snapped up Dobbies in 2007 for £150m in one of its first ventures outside of the core food business. Since the acquisition, Tesco has grown Dobbies into the UK’s second largest specialist garden centre retailer, operating 35 outlets across Scotland, England and Northern Ireland.
However, Dobbies slumped to losses of close to £50m in the year to 1 March 2015 after it was forced to write down the value of its estate.
Tesco said this morning that the garden centres made a contribution of £17m to the group’s reported pre-tax profits in the year ended 27 February 2016.
CEO Dave Lewis said: “Through their hard work and dedication to customer service, Dobbies colleagues have built a great business, and I would like to thank them for everything they have done.
“It was a difficult decision to sell the business, but we believe this agreement will give Dobbies a bright future, while allowing our UK retail business to focus on its core strengths.”
Andrew Bracey and Barney Burgess, of Midlothian Capital Partners and Hattington Capital respectively, added: “We are delighted to have been chosen by Tesco to take ownership of the Dobbies Garden Centres business. It is a great business with fantastic colleagues. We’re very optimistic about the potential of the business, and we look forward to growing the business across the UK from its base in Scotland.”
Tesco said it would continue to offer customers a “wide selection” of home and garden products through its own stores and online.
Gross assets relating to Dobbies Garden Centres Ltd included in the Tesco PLC accounts as at 27 February 2016 were £255m. Tesco said it would use the cash from the sale for “general corporate purposes”.
Morning update
Tesco continued yesterday’s rise this morning as shares rose another 1.1% to 154.4p.
Tesco apart there is little newsflow on the markets this morning.
Elsewhere, Ocado (OCDO) has clawed back some of the big losses suffered recently, opening up 3.2% to 230.3p. WH Smith (SMWH) also opened strongly, up 1.3% to 1,603p, with Booker (BOK), up 1.8% to 167.8p, and B&M (BME), up 1.8% to 275.7p, also rising.
The FTSE 100 opened positively after more losses yesterday, climbing 1.2% to 6,019.49 points so far.
Yesterday in the City
The FTSE 100 returned to the red after a brief reprieve on Wednesday. The blue-chip index closed 0.3% down yesterday to 5,950.48 points as polls indicated that the Leave vote was ahead as the EU referendum draws closer.
Poundland (PLND) was up another 2.5% to 205p, its highest level since early January, as Steinhoff revealed it had built its stake to almost 23%. The stock is now up more than 30% since news emerged this week of the potential takeover. Not even an 84% decline in profits could dent investor confidence.
Tesco was one of the top risers of the FTSE 100 with the shares up 1.3% to 153.3p. Ocado, however, continued to see its stock decline, falling 1% to 220.5p.
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