Harworth doubles down on opposition to Peel Group takeover bid

The Yorkshire firm made a statement to the Stock Exchange after Peel published its offer document

Developers Harworth has reiterated its opposition to a £583m takeover offer by major shareholder Peel Group.

Peel already holds nearly 30% of Harworth’s shares, and earlier this month launched a bid to buy the company’s remaining shares through a subsidiary. The company’s offer of 172.5 per share would see it spend around £417m for the 70% of the company it currently does not own.

Manchester-based Peel has now published its offer document, arguing that Rotherham-based Harworth’s cash flow profile is increasingly becoming less sustainable, driven partly by the company’s increasing administrative cost base and increasing net finance costs.

It wants Harworth to pivot toward strategic land activities and selective development, which it says has a lower cost base, and argues that Harworth’s strategy of developing land for data centres is “very early stage, highly speculative and unlikely to convert to cash sales or deliver the contribution required to improve the overall returns of the business to an acceptable level within the short to medium term”.

Harworth’s board rejected the takeover bid when it was first announced and has now repeated its stance, saying that “the board is unanimous and unequivocal in its rejection of the offer which, in its view, fundamentally undervalues Harworth and its near and longer-term prospects.”

In a new statement to the Stock Exchange, Harworth said it would set out wider views on the offer by September 9, but in the meantime, it advised shareholders to do nothing on the offer.

Harworth originated as the property wing of UK Coal, and many of its earliest properties were former mining sites in the North and the Midlands. It currently has holdings of more than 15,000 acres across 100 sites, and specialises in developing industrial and logistics developments for sale. It recently said that announced plans to develop a second data centre, saying a deal to sell it could be worth more than the £106m it received for a data centre site sold to Microsoft in Leeds earlier this year.