Tesco offloads Dobbies Garden Centres to investor group for £217m

The supermarket giant revealed that the garden centre chain, which it acquired for about £150m back in 2007, has been snapped up by a group led by Midlothian Capital Partners and Hattington Capital.

Tesco said the cash received in the deal for the 35-store estate will be used for “general corporate purposes”.

It comes just days after Tesco inked deals to sell its Kipa grocery business in Turkey and the Giraffe restaurant chain.

Tesco sold its 95.5% controlling stake in Kipa to rival Migros in a deal worth about £30m, while Harry Ramsden’s owner Boporan has swooped to acquire Giraffe’s 54 restaurants.

Wyevale Garden Centres, owned by private equity firm Terra Firma, placed a bid for Dobbies and Edinburgh Woollen Mill owner Philip Day reportedly expressed an interest in acquiring the garden chain.

Since Lewis took the helm in September 2014, he has focused on regaining competitiveness in Tesco’s core UK supermarkets and streamlining its portfolio of other businesses.

Last September Tesco sold its South Korean business, Homeplus, for £4.2bn, while it has also disposed of the Blinkbox streaming service.

Although it has refused to comment on market speculation, it is understood that the grocer is also exploring the option of selling its Harris + Hoole coffee shop chain.

Lewis said: “Through their hard work and dedication to customer service, Dobbies colleagues have built a great business and I would like to thank them for everything they have done.

“It was a difficult decision to sell the business, but we believe this agreement will give Dobbies a bright future, while allowing our UK retail business to focus on its core strengths.”

The investor group, which is said to include “a number of highly experienced retail industry investors,” has pledged to protect jobs and retain Dobbies head office in Scotland.

In a joint statement, Andrew Bracey and Barney Burgess, of Midlothian Capital Partners and Hattington Capital respectively, said: “We are delighted to have been chosen by Tesco to take ownership of the Dobbies Garden Centres business. It is a great business with fantastic colleagues.

“We’re very optimistic about the potential of the business, and we look forward to growing the business across the UK from its base in Scotland.”

Simon Quinton Smith of garden centre and horticultural property consultancy Quinton Edwards added: “The purchase by this new group is good for the garden centre industry, good for suppliers and will allow greater competition and more investment in the sector.”