David Prosser's Outlook: Tesco goes for flower power

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Never mind the Chelsea Flower Show. The really fascinating battle of the blooms culminated yesterday in a decisive victory for Tesco over the Scottish entrepreneur Sir Tom Hunter. The supermarket group has reached agreement with Sir Tom's West Coast Capital to buy its stake in Dobbies Garden Centres, giving it total control of the chain.

In hindsight, there was only ever going to be one winner in what has become an increasingly bitter row between Tesco and Sir Tom. It's a loss that will cost Sir Tom £9m – the difference between the £15-a-share Tesco offered him for his stake in Dobbies last summer and the £12 it agreed to pay yesterday.

Critics of Tesco will claim this is another case of the retailing juggernaut rolling over anything in its path. Yesterday's deal was reached following the failure last week of West Coast to block the plans of Dobbies' Tesco-dominated board for a rights issue under which Sir Tom would have to find £44m to prevent his stake being diluted.

That strategy came unstuck when a court ruled against West Coast, which had argued that the rights issue and a dividend reduction previously announced by Dobbies, was part of a plan designed to bully minority shareholders.

The rights issue has now been postponed – and will almost certainly be abandoned given that Tesco will now be able to take Dobbies private. Now Sir Tom must watch and wait to see how Tesco's plans for the chain impact on the larger garden centre businesses he owns, Wyevale and Blooms of Bressingham.

On the face of it, Tesco's plans for Dobbies pose more of a threat to DIY chains such as Homebase and B&Q, which also operate in this sector. The supermarket group wants to launch several Dobbies Garden World stores to take on these chains, and also has plans to sell of-the-moment environmental products such as solar panels and wind turbines.

However, one intriguing detail to emerge from last week's court case was that Tesco had apparently offered to pay Sir Tom £15-a-share if he agreed to sell it 31 Wyevale stores for £175m, so the supermarket group clearly has ambitions in this area of the market too.

Tesco's chief executive, Sir Terry Leahy, is famously single-minded in his efforts to drive his company on to ever greater market domination. At Dobbies, however, the credit for victory belongs to Sir Terry's legal and corporate affairs director, Lucy Neville-Rolfe, who was appointed last year as chairman of the business.

Not that Ms Neville-Rolfe has given up the day job. Though she had been busy securing full control of Dobbies for Tesco, she has still found time to manage the retailer's libel action against The Guardian. That case has yet to be settled despite the newspaper's claim it has corrected a story that accused Tesco of extensive tax avoidance. The paper's legal advisers should be very afraid.

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