03 Jun 2008

Recommendation - Takeover Offer

The boards of directors of Tesco PLC ('Tesco') and Dobbies Garden Centres plc ('Dobbies') announce that they have reached agreement on the terms of a recommended cash offer for Dobbies by Tesco Holdings Limited ('Tesco Holdings') at a price of 1,200 pence in cash for each Dobbies share not already held by Tesco or its associates (the 'Offer'). 

James Barnes and Sharon Brown, being the independent directors of Dobbies (the 'Independent Directors'), who have been so advised by Brewin Dolphin Limited, consider the terms of the Offer to be fair and reasonable. In providing its advice, Brewin Dolphin Limited has taken into account the commercial assessments of the Independent Directors. 

The Offer by Tesco Holdings represents an enterprise value which is a multiple of approximately 17.7 times Dobbies' adjusted EBITDA for the 12 months ended 31 October 2007. The Offer also represents a price to earnings ratio of approximately 30 times Dobbies' adjusted diluted earnings per share. Both of these ratios are at a significant premium to the average valuation at which small cap retailers currently trade and against the background of volatile debt and equity markets and an uncertain outlook for consumer spending the Independent Directors view the Offer as extremely attractive. It should also be noted that since Tesco Holdings acquired a majority shareholding in Dobbies in September 2007, the FTSE All-Share General Retailers Index has fallen by approximately 27 per cent. 

Tesco Holdings beneficially owns approximately 65.5 per cent. of the existing issued share capital of Dobbies and has received an irrevocable commitment to accept the Offer in respect of approximately a further 29.2 per cent. of Dobbies' share capital from West Coast Capital (Lios) Limited. On acquisition of 75 per cent. or more of the voting rights attaching to the Dobbies Shares, it is Tesco Holdings' intention to procure an application for the cancellation of Admission to AIM which will result in the cancellation of trading of the Dobbies Shares on AIM. Cancellation would be likely to reduce significantly the liquidity and marketability of any Dobbies Shares which are retained by shareholders following the Offer. 

Given the circumstances set out above, the Independent Directors unanimously recommend that Dobbies Shareholders accept the Offer.

The offer documentation in relation to the Offer, has been posted by Tesco Holdings to Dobbies shareholders and will be available on the Dobbies website at: www.dobbies.com.

Enquiries: 

James Barnes, Chief Executive
Sharon Brown, Finance Director
Dobbies Garden Centres plc
Tel: 0131 663 6778

Sandy Fraser
Brewin Dolphin Limited (Nomad)   
Tel: 0131 529 0272

Ben Woodford / Emma Kent / Antonia Coad
Bell Pottinger Corporate & Financial
Tel: 020 7861
 

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