Hunter strikes back at Tesco in garden centre war

LONDON (Reuters) - Scotland's richest man struck back against a move by Tesco to strengthen its grip on Dobbies Garden Centres , seeking a court order to block a planned rights issue that could dilute his stake.

Dobbies said on Friday that Tom Hunter's West Coast Capital Ltd, its second-biggest owner, aimed to stop the planned 150 million pound fundraising, underwritten by majority owner Tesco .

West Coast Capital owns a third of Dobbies, Britain's third-largest garden centre, and Hunter resisted a takeover offer from Tesco last year.

West Coast's application for a court order could take place as early as next week, Dobbies Chief Executive James Barnes told Reuters.

"My understanding is that both sides will put their case forward and the judge will decide whether or not there is a case to be answered," Barnes said. "We'd like it to happen sooner rather than later."

Barnes said Dobbies is keen to continue its plan to grow by acquisitions, hopefully at the rate of at least one new store opening a year.

With summer fast approaching, the gardening sector is seen as fast-expanding and reasonably immune to an economic slowdown. Dobbies, with a chain of 24 stores across Scotland and England, is an exception in an otherwise highly fragmented market.

Tesco, Britain's biggest retailer, said in April it would underwrite the share issue to fund expansion. It owns about 65 percent of Dobbies.

Dobbies plans to issue up to 12.45 million shares at 1,200 pence each in an open offer on a six-for-five basis, around a tenth below Dobbies's share price at the time.

If the issue proceeds, Hunter will need to stump up 44 million pounds to retain his stake. If no minority shareholders participate, Tesco's holding could rise to 83 percent.

Hunter, named as Scotland's richest man in the Sunday Times Rich List, owns Dobbies's largest rivals, such as Britain's biggest garden chain, Wyevale. West Coast Capital controls around 110 garden centres in Britain through Wyevale and the Blooms of Bressingham chain.

(Reporting by Hsu Chuang Khoo; Editing by Quentin Webb)

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