Sir Tom Hunter, the retail entrepreneur, on Monday set his sights on acquiring Wyevale Garden Centres after West Coast Capital, his investment vehicle, spent £46.6m buying a 14.99 per cent stake in the UK’s biggest garden centre chain from Laxey Partners.
West Coast, through a vehicle called WCC Hortus, paid 555p a share for the stake. That represented a one per cent premium to yesterday’s close of 550p and a 7 per cent premium to Friday’s close. The shares had rallied 6.6 per cent on the news yesterday, valuing the company at £308m.
West Coast said it intended to buy Laxey’s remaining 13.8 per cent stake, which would cost £42.9m at 555p a share. That would take West Coast’s combined stake to 28.8 per cent, just shy of the 29.9 per cent level that would trigger a mandatory offer for the rest of the equity.
It is understood that Sir Tom will pay for the shares through a mix of equity and debt. He is thought to have been in discussions with Laxey for a few weeks.
Wyevale said in a statement that it would “co-operate” with West Coast by opening its books for due diligence.
“We aim to commence due diligence as soon as is practicable on Wyevale with a view to making an offer for the remainder of the shares,” said Ewan Hunter, a spokesman for West Coast.
The company, which runs over 100 garden centres across the UK, made a profit of £21m last year and is expected to make a profit of £22m in the year to December 2005. It is understood that if Laxey sold both stakes at 555p, it would stand to make a combined profit of £20m on the sales.
News of a potential takeover by Sir Tom comes after a difficult period for Wyevale, which has seen the garden centre group locked in a vicious battle with Laxey over its management style and strategy. The activist fund manager succeeded – after two unsuccessful attempts – to oust the chairman, David Williams, at the end of the year.
However, it did not entirely get its way after the board snubbed Laxey’s choice for chairman, Robert Ware, and appointed Jim Hodkinson, formerly of New Look and B&Q, to the post.
Sir Tom, who also holds stakes in BHS and Booker, the cash-and-carry group, declined to comment on whether he would also buy the 11 per cent holding of Laxey Millennium Partners, a US hedge fund, at 555p.
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