Share offer on the basis of six for every five existing shares, at a price of £12 a share could cost Scottish entrepreneur £43m.
Dobbies has announced plans to raise £150m from shareholders via an open offer that will see it put shares up for £12 a piece.

The offer is being underwritten by Tesco, which owns 65% of the garden centre chain, and is being seen as a move to make life uncomfortable for Sir Tom Hunter.

The share offer is also higher than the garden centre chain's market value of £134m.

City analysts believe the issue of 12,446,208 shares at £12 apiece (on a 6 for 5 basis) could cost Sir Tom £43m.

As Reuters explains: 'The price is below Dobbies current share value of 1,312.5 pence and also below Tesco's offer price of 1,500 pence.

'This means that Hunter would have to pay £43 million pounds to keep his stake at its current level.

Dobbies was the subject of a long-running battle between Sir Tom Hunter, who is the second largest shareholder with 29%, and Tesco last year.

Sir Tom's holding prevents Tesco from being a wholly-owned subsidiary and from delisting Dobbies.

Separately, Dobbies reported its preliminary results for the year ended October 2007.

Within that, it said profits fell 11.7% from £4.3m to £3.8m in the previous year on sales up 21.4% to £83.5m (+1.4% on a like-for-like basis – growth Dobbies said that excluded new stores, re-developments and extensions).

Encouraging year

Commenting on the results, chief executive, James Barnes said: "Dobbies has had an encouraging year despite some difficult trading conditions, and we're looking forward to working in partnership with Tesco to expand this great business."

He added that sales in the four months from November 2007 to February 2008 have increased by 13.4% in total by comparison with last year, and have increased by 3.1% on a like-for-like basis.

Mr Barnes said he is 'optimistic' for 2008 and beyond despite many households 'feeling the pinch'.

"We remain cautious with regard to consumer economics in 2008. But we continue to plan for growth in ranges, services and retail floorspace. Our active development of local sourcing and our superb food halls are just two examples of ventures that customers can expect to see more of in the years to come.

Indeed, prospects for the years beyond 2008 give me cause for great optimism. Gardening and outdoor living have been rapidly-growing sectors of the UK economy for years and this trend is set to continue as UK demographics change."

Highlights

New space helped with an overall upturn in sales of more than 20%;

New stores: Dunfermline (April 2007); Chesterfield (October 2007); Southport (March 2008); acquired Sandyholm Garden Centre (April 2008);

Complement existing product ranges with affordable environmental lines ranging from simple wormeries to hi-tech equipment.