17th Jun 2016 08:39
LONDON (Alliance News) - Tesco PLC on Friday continued to shed non-core assets, with the UK grocer selling its Dobbies Garden Centres business to an investor group for GBP217 million in cash.
The investor group purchasing Dobbies is led by Midlothian Capital Partners and Hattington Capital. Tesco, which bought the business in 2007, will use the proceeds for "general corporate purposes".
Dobbies operates across 35 garden centres in the UK.
"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," Chief Executive Dave Lewis said in a statement.
Lewis replaced former CEO Philip Clarke in 2014 and embarked on a mission to rid the retailer of its non-core businesses in an attempt to streamline the company after it suffered a staggering GBP6.33 billion pretax loss in its 2015 financial year.
That year also saw the resignation of Clarke, a scandal that saw Tesco admit serious accounting errors and profit overstatements, leading to the pretax loss.
In an attempt to diversify the business, Tesco, under Clarke's leadership, had bought the Giraffe restaurant chain in 2013 after having purchased a 49% stake in the Harris & Hoole coffee shop chain in 2012, with the remainder bought earlier in 2016.
However, under Lewis's leadership, Tesco has been selling off some of those non-core assets in order to focus on the core UK grocery business.
The sale of Giraffe was revealed last week, along with the disposal of Turkish supermarket chain Kipa.
Giraffe was sold to Boparan Restaurant Holdings Ltd for an undisclosed amount, although a Sky News report released before Tesco confirmed the sale said the price was understood to be "a modest amount".
Boparan is a vehicle of entrepreneur Ranjit Boparan and owns Harry Ramsden's fish and chip restaurants as well as upmarket Indian restaurant The Cinnamon Club. It is also the controlling shareholder in 2 Sisters Food Group, the owner of Goodfella's pizza and the UK's largest chicken supplier.
Kipa was sold to Swiss retail company Migros for GBP30 million.
In September last year, Tesco sold its Homeplus business in South Korea for GBP4.24 billion, prior to which the retailer closed down or sold all its video-on-demand Blinkbox businesses as well as its Tesco broadband unit.
In April this year, Tesco sold just over half of its stake in e-commerce platform Lazada Group SA to China's Alibaba Group Holding Ltd for USD129.0 million, amid a wave of rumours that the retailer also would be selling the Giraffe and Dobbies businesses, as well as the Harris & Hoole chain.
After the sale of Lazada, Sky News reported that private equity-owned garden centre chain Wyevale had placed a GBP175.0 million bid for Dobbies, and later in May, The Times reported that retail billionaire Philip Day, the chief executive of Edinburgh Woollen Mill, also had tabled a bid.
With the Giraffe and Dobbies disposals now confirmed, Harris & Hoole is left as the most obviously "non-core" business remaining in the Tesco stable.
Shares in Tesco were trading up 1.5% at 154.87 pence on Friday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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