Harworth Group (LSE:HWG) has told shareholders to reject Peel Pepper (UK) Limited's revised takeover offer of 177.5p a share, up from 172.5p, calling it a significant undervaluation of the business.
The board said the revised offer represents a 17.4% discount to Harworth's EPRA net disposal value (NDV) of 214.8p per share as at 30 June, and ignores embedded value in its hyperscale data centre pipeline and industrial and logistics development sites.
Harworth pointed to fresh progress underpinning that case: it is targeting exchange of a conditional contract for a data centre site during the fourth quarter, with completion and cash proceeds expected by the end of December 2028, and has completed a sale of a 40-acre strategic land site in St Helens to Tritax Big Box Developments at book value.
The company is also accelerating a cost-cutting programme approved in July, targeting at least £7.4 million in annualised savings by the end of 2028, of which £1.3 million has already been delivered through headcount reductions.
The board believes Peel Bidco is timing its approach to exploit a "material dislocation" between Harworth's share price and its underlying asset value, and stands to save around £30.7 million in Stamp Duty Land Tax by acquiring the company via takeover rather than direct property purchases.
Advisers Barclays and Peel Hunt do not consider the revised offer's terms fair or reasonable, the board said.
News Intelligence what this means for the company
Peel Pepper raised its offer to 177.5p per share, but Harworth's board has unanimously rejected it again, arguing the bid still undervalues the company by 17.4% relative to its EPRA net disposal value of 214.8p and ignores embedded value in its data centre and industrial pipeline. The rejection comes as Peel's stake has now crossed 30%, triggering a mandatory offer under Takeover Code Rule 9—a threshold that locks in the formal process and removes Harworth's ability to block a deal if Peel can secure sufficient acceptances.
- Tritax Big Box Developments, which just acquired Harworth's 40-acre St Helens site, may face questions about whether further asset sales to third parties will proceed or be forestalled if Peel's offer succeeds.
The board's rejection rests on a valuation gap (177.5p offer vs. 214.8p NDV) that depends on realizing value from a data centre pipeline (conditional contract exchange targeted Q4, completion by end-2028) and accelerated cost cuts (£7.4m annualised target by end-2028, £1.3m delivered). If those assets and savings materialize on schedule, the gap is real; if delayed or scaled back, the board's defence weakens materially. Peel's tax arbitrage (£30.7m SDLT saving via takeover vs. direct purchase) gives it room to raise the bid further without destroying deal economics.
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