Supermarket battle lines re-drawn

The council has withdrawn from the contract to sell its land to Tesco

A superstore planning battle has taken a fresh twist after a council pulled out of a deal to sell a site to Tesco.

Scottish Borders Council had agreed a contract to sell land at Pinnaclehill in Kelso to the supermarket firm - ahead of a rival bid from Sainsbury's.

However, it said Tesco had not been able to secure additional land needed for the development within an agreed timescale and would re-market the site.

A Tesco spokesman said it had not decided whether to make a fresh bid.

The battle to build a new supermarket in Kelso - with a population of about 6,500 - has been ongoing for some time.

Re-marketing gives all interested parties a fair opportunity to bid for the council's land

Council statement

Sainsbury's had the initial advantage last year when the local council backed its preferred site at Pinnaclehill ahead of two rival locations.

The company then went ahead and lodged a planning application without actually owning the land concerned.

However, Tesco regained the upper hand when it emerged as "preferred bidder" for the council-owned site with an offer believed to be about £6m.

Sainsbury's struck back by buying up adjacent land which would have been needed for any development, resulting in a stalemate situation.

It has now led to SBC deciding to withdraw from its deal with Tesco and putting the land back up for sale with a £3.8m price tag.

Tesco and Sainsbury's have plans for a store in Kelso

A council statement said that after taking external legal advice it had decided to remarket the site.

It will also offer the successful bidder the use of compulsory purchase orders to secure any additional land it needs.

It said: "Re-marketing gives all interested parties a fair opportunity to bid for the council's land.

"The outcome of the marketing exercise is to be reported back to the council for a decision on who the successful bidder should be."

The decision has been greeted as a victory by Sainsbury's.

A spokesman said: "Today's announcement by SBC clearly illustrates that Tesco have unequivocally failed in their pursuit to deliver a food store for the community of Kelso."

Different applications

Tesco corporate affairs manager Doug Wilson said it believed it had offered a "fair price" for the site which would have given best value to the council.

"The process has been complex and Tesco has worked hard over the months to develop two different applications for the site that are ready to submit to the council," he said.

"However, despite Tesco having been selected as the preferred bidder by SBC in December 2008, in February this year Sainsbury's went ahead with their purchase of some of the land required to develop the site.

"We are aware of the remarketing of the site and will review our position; as yet no decision has been taken whether we will rebid."