Texas dispute solved for pounds 9.3m

Ladbroke finally settled its two-year dispute with Sainsbury over the sale of Texas Homecare yesterday. News of the settlement accompanied an announcement by Ladbroke, the leisure group, of a pounds 31.3m acquisition of AR Dennis, a chain of 114 betting shops.

The settlement of the Texas Homecare dispute comes nine months after the matter was placed in the hands of an independent arbitrator. Ladbroke must now repay pounds 9.3m of the original pounds 290m Sainsbury agreed to pay for the DIY chain. The figure is a blow for Sainsbury, which had hoped to recoup pounds 30m-pounds 40m. The two sides had been pounds 70m apart on their valuations. "It's a paltry sum. Sainsbury must be very disappointed," one analyst said.

The Texas deal has clearly cost Sainsbury far more than it expected.

In addition to the dispute over its value, Sainsbury announced a pounds 50m provision to cover the additional costs of converting the Texas stores to the Sainsbury Homebase format last month as part of its profits warning announcement.

To cover the costs, Ladbroke will include an exceptional charge of pounds 15.4m in its accounts for the year to December 1996. This covers interest due on the settlement as well as other costs relating to the dispute.

Separately, Ladbroke is paying pounds 31.3m cash for AR Dennis, a north London- based bookmakers which has 114 outlets. The deal gives Ladbroke 1,925 betting shops and confirms its position as Britain's leading bookmaker ahead of William Hill and Coral.

AR Dennis was founded in Stoke Newington in 1935 by Alfred "Dick" Dennis. It is now run by his son Gordon who, at 61, says he would like to retire. He said the jackpot win of pounds 31.5m would not turn the family's heads or send him out buying a string of racehorses: "We are an ordinary family who lead ordinary lives."

Christopher Bell, managing director of Ladbroke Racing, said: "It is not often that a chain of betting shops of the size and quality of AR Dennis comes up for sale and we are delighted that we have been able to make this acquisition."

Investment column, page 18

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