Peel Group: Doncaster Sheffield Airport landowner makes £583m offer for Harworth Group
Peel Group, the real estate investor, has made an offer to buy Harworth Group, the Yorkshire-based regeneration, strategic land and development business, in a proposed deal which values the company’s share capital at around £582.88 million.
The Peel Group has announced a cash offer of 172.5 p to acquire the entire share capital of Harworth Group plc. Peel said the offer represents a significant premium of 36.0 per cent to Harworth’s volume-weighted average share price for the latest three-month period and provides a “compelling opportunity for shareholders to realise full liquidity at fair value”.
The offer values the entire issued and to be issued share capital of Harworth at approximately £582.88 million, Peel said in a statement.
It added: “The Peel Group is a long-term investor in Harworth, having held various ownership interests in Harworth over a number of years.
"Peel believes that Harworth's assets would be best owned, managed and developed under its full control,’’ the statement said.
"The offer provides Harworth Shareholders with certainty of value in cash at a significant premium of 20.1 per cent to the undisturbed price, 36.9 per cent to the volume-weighted average share price over the last one-month period and 36.0 per cent to the volume-weighted average share price over the three-month period.
"Harworth has a highly concentrated shareholder register, which Peel believes impacts its share liquidity and limits growth. The largest three shareholders own approximately 75.7 per cent of Harworth's share capital.
"Peel believes Harworth's stock market listing provides limited benefit to the company. Harworth has not raised new equity in the last nine years, and Peel believes Harworth would not be able to raise new equity accretively today, given its consistent discount.”
In the statement, Peel said it believes Harworth's cash flow profile is becoming less sustainable, “driven partly by Harworth's increasing administrative expenses and net interest expenses, which are significantly higher than its passing rental income”.
It added: “Peel considers Harworth's direct development and hold strategy to be capital-intensive, slow to deliver value and increasingly unable to generate appropriate risk adjusted returns.
"Harworth has delivered annualised total accounting returns of just 4.2% per annum over the last four accounting years,’’ it added.
"As a result, Peel believes the business should pivot toward strategic land activities and selective development, a model that has a lower cost base and is more effectively executed within a private-company structure.”
Peel Group are the landowners for Doncaster Sheffield Aiport. The airport closed in 2022 when Peel Group said it was no longer viable. Peel are in talks to lease the land to Doncaster Council, so it can reopen.
The board of Harworth Group said: “The board has had no substantive engagement with Peel Pepper or Peel about any offer before their announcement today.
“The board is reviewing the terms of the Offer with its advisers and a further announcement will be made as appropriate.
“In the meantime, shareholders are strongly advised to take no action.”