Tesco turns up heat with Dobbies issue

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The battle left Tesco in control with a 65% stake in Dobbies but Hunter refused to bow out and holds 29.16%.

Today Tesco is underwriting a £150 million share issue by Dobbies, which mean Hunter would have to fork out almost £44 million to prevent his stake being diluted. Dobbies has already tried to shake him off by declaring it will not be paying any dividends for the foreseeable future.

The new shares are being issued at 1200p against today's price of 1312p. If Hunter rejects the offer, Tesco's stake would rise to 84% but that is not enough for it to compulsorily purchase the West Coast stake.

Dobbies' sales for the year to the end of last October rose 21% to £83.5 million. In the past four weeks like-for-likes have improved from 1.4% for the whole of last year to 3.4%. Pre-tax profits fell 12% to £3.8 million after £3.1 million of fees for the bid battle.