Insiders believe Wyevale Garden Centres owner Terra Firma is in the final stages of negotiation with Tesco to buy the 35-centre Dobbies group.

Sources say they have been told the due dilligence process is under way, which could mean an announcement is only weeks away.

Speculation about a deal between the two has been rife since the early days of  Terra Firma’s ownership of Wyevale (then The Garden Centre Group), but has increased during the past year following the Tesco group’s profits crisis and its recent divestment of unprofitable subsidiaries.

Tesco acquired a majority shareholding in 2007 in a takeover that valued Dobbies at £155m, completing the deal the following year by buying Sir Tom Hunter’s remaining 29% stake for £36m.

Dobbies reported profits of £6.7m on turnover of £142m in the last published results (November 2014)).

A merger would give Terra Firma control over 182 garden centres with a combined turnover approaching £450m, profits (based on 2013 results) of some £30m and a workforce numbering around 8,000.

The deal is an attractive one for Terra Firma on a number of levels – extra buying power, additional geographical coverage (particularly in Scotland) and an opportunity to strip out duplicated administrative costs. Wyevale could also expect a surge of recruitment to its Garden Club membership of more than 2.4 million.

Profit per centre at Dobbies is around £191k, compared to £158k at Wyevale.

Terra Firma, which is committed to growth by acquisition, is also believed to have contacted many of the 11 member companies of the Tillington buying and marketing group, with offers to buy their centres.

Tillington, which buys core lines centrally and promotes through customised editions of its free Beautiful Gardens magazine, comprises many of the UK’s most profitable independents and chains. They are:

Alton, Bents, Frosts, Hayes Garden World, Otter Nurseries, Ruxley Manor, Scotsdale, Squires, Van Hage, Webbs of Wychbold and Whitehall GCs.

The market will be keeping a keen eye on how ongoing retail rationalisation, not just by Wyevale but by other currently acquisitive businesses, will affect the UK’s garden centre landscape.

Alton Garden Centre owner Derek Bunker (a Tillington member) believes there will always be a demand for well-run independent garden centres. “We’ve heard scare stories before…they warned us that Texas, Sainsbury’s Homebase, Gardenstore, B&Q and the like were all bad news for us, but we’re still here and thriving. Most of my customers would never dream of going to them.