In a short statement this morning, Dobbies, Britain second largest garden centre chain, says discussions have taken place which may lead to its takeover. It stresses there can be no certainty an offer will be formally tabled.
The confirmation of an approach was enough to send Dobbies Garden Centres PLC shares rocketing 9.45% or 115p to 1332p in early trade, valuing the group at £133.6m.
Tom Hunter has long been in the frame to launch a takeover, the rationale being that he could merge it with his Wyevale garden centre business. Hunter joined forces with Iceland's Baugar last April and took Wyevale private for £311m.
Hunter already has a 10.6% stake in Dobbies through his West Coast Capital vehicle.
Meanwhile CityAM this morning reports that Apax Partners is mulling a bid for Dobbies. Again there is scope for merger as Apax bought Scandinavian garden centre chain Plantagen recently.
Seymour Pierce analyst Richard Ratner has long expected Hunter to make a pitch and indeed early this morning he reckoned the retail entrepeneur was makiing the running. Subsequent conversations with trade sources however have led him to believe it is a venture capitalist, possibly APAX.
Still, Hunter's 10.6% stake is enough for him to prevent a compulsory acquisition of shares if he so wishes.
Ratner believes there are now two scenarios: either Hunter forces the predator to pay through the nose or he blocks the take-over.
Given that Seymour thinks the latter is more likely, the broker has moved from from ‘outperform’ to 'hold' on Dobbies shares
Last month at its AGM Dobbies management revealed continued good trading momentum, with total sales over first half or 25 weeks from 1 November 2006 up 38.8% and ahead 12.6% on a like for like basis.
Dobbies next interim announcement is scheduled for 27 June.