Sir Tom Hunter is set to make a takeover offer of £300m (€440m) for Wyevale, the UK garden centre operator.
On February 27, Hunter acquired a 14.99% stake in Wyevale through his investment company West Coast Capital at 555p per share from Laxey Partners, which owns 28.6% in Wyevale.
Laxey has also agreed to sell its remaining shares to West Coast Capital. Hunter is to conduct due diligence on the business before making a formal bid.
Wyevale directors warned that there was no guarantee of a bid yet but the news sent its shares up by 35p to 550p, giving the business a value of £300m.
Under Takeover Panel rules, Hunter will have to wait until the week beginning March 6 before acquiring the rest of Wyevale’s shares from Laxey and a full takeover bid would also need a recommendation from the board.
Hunter’s price of 555p a share is below the 580p offered by private equity firm Cinven last year and might not be enough to secure a board recommendation. However, since the board is co-operating with the due diligence process, it seemly likely that it is comfortable with the indicative bid level.
IFR Buyouts Europe understands that Hunter has lined up debt financing from HBOS, contingent on due diligence. Advisers have not yet formally been appointed by the acquirer.
Hunter is understood to be planning to invest heavily in Wyevale if he buys the chain. A source close to the deal said: “The business needs a lot of investment. West Coast Capital sees it as a challenging business but they are prepared to go for a long run at it.”
The retailer is undergoing a restructuring involving job cuts and store closures, in an attempt to save £1.5m.
In a statement, Wyevale said that it had agreed to open its books to WCC after the private equity group indicated that it was mulling a bid.