Peel Holdings, the largest shareholder in Harworth Group (LON:HWG), has made an offer for the whole of the share capital. The cash offer, pitched at 172.5p per share, represents a 20% premium to the closing price on Wednesday 5 August.
‘Capital intensive strategy’ criticised
Peel Holdings is the ultimate owner of 29.96% of Harworth Group via its wholly-owned subsidiary Goodweather Holdings. The offer values the entire share capital of Harworth at just under £583 million.
Harworth owns a portfolio of strategic land, industrial and logistics assets mainly in the MIdlands and the North of England. Peel Group argues the firm’s cash flow profile is ‘increasingly becoming less sustainable’ due to rising interest and administration costs, which exceed recurring rental income.
It also argues Harworth’s direct development and hold strategy is ‘capital-intensive, slow to deliver value and increasingly unable to generate appropriate risk-adjusted returns’. Therefore, it says, the firm should ‘pivot’ towards a lower-cost model of strategic land activities and selective development.
At the time of writing, Harworth Group had not issued a statement regarding the unsolicited offer.
Just yesterday Harworth announced it was working on the sale of a second plot of land for a potential data centre. It also said it had exchanged, completed or was ‘in legals’ for 60% of its targeted FY26 sales including around 950 residential plots.
The shares had already been creeping up for a few days, and they added another 6% on yesterday’s update. The cash offer represents a 20% premium to last night’s price, but it feels opportunistic as Harworth shares were trading above 172p as recently as March.
What the offer does do is provide liquidity, since between them the three biggest shareholders own 75% of the equity. Whether that’s a good enough reason to sell depends on your long-term view and your faith in the firm’s strategy.
