Peel doubles down on £583m Harworth takeover as it attacks firm’s strategy
The real estate group has stepped up its acquisition campaign following the latter’s rejection of its buyout offer earlier this month, arguing that the regeneration specialist’s current strategy is becoming ‘increasingly less sustainable’.
The Manchester-based investor has offered 172.5p per Harworth share in cash, and in documentation published today Peel sets out a detailed case for why it believes shareholders should accept the offer, taking aim at Harworth’s financial performance, rising costs and development strategy.
Peel said Harworth’s cash flow profile was becoming “increasingly less sustainable”, pointing to the combined cost of its administrative expenses and net finance costs, which reached £47m in FY2025.
This compares with £14.7m of passing rental income, according to Peel, while administrative expenses and finance costs have increased by 103.2% over the past four financial years.
Peel also argued that Harworth has delivered annualised total accounting returns of just 3.9% over the past four years and questioned whether the developer can achieve its target of growing EPRA net development value to more than £1bn.
Harworth originally targeted reaching the milestone by the end of 2027 but pushed the date back to between the end of 2028 and 2029 in its January trading update.
Peel said achieving the revised target would require annual EPRA NDV growth of around 8%, significantly ahead of Harworth’s historic performance.
It argued that Harworth’s direct development and hold strategy was capital-intensive, slow to deliver value and increasingly unable to generate appropriate risk-adjusted returns.
Instead, Peel believes the business should pivot towards strategic land and selective development, operating with a lower cost base and within a private company structure.
The investor also questioned Harworth’s emerging strategy around powered land and data centres, describing the opportunity as being at an early and “highly speculative” stage.
Harworth has recently highlighted progress in this area, including a £106.6m transaction with Microsoft at its Skelton site in Leeds and an exclusivity agreement announced this month relating to a potential powered land sale.
However, Peel argued that much of the value associated with the Skelton transaction would already be reflected in Harworth’s financial performance, while cautioning that the more recent potential transaction remains subject to further conditionality, due diligence, and negotiation before becoming an unconditional sale.
Peel said it remained cautious about the prospects of converting Harworth’s wider powered land portfolio into completed transactions quickly enough to materially improve the group’s returns in the short to medium term.
The 172.5p-per-share offer represents a premium of 36.9% to Harworth’s one-month volume-weighted average share price and 36% to its three-month average.
Peel also argued that Harworth’s public listing offered limited benefit, pointing to the company’s highly concentrated shareholder base with three shareholders owning around 76% of the company, and the fact that it has not raised new equity for nine years.
Harworth has been approached for comment.
The publication of the offer document formally sets out the terms and conditions of Peel’s bid, as the investor seeks to persuade Harworth shareholders that its cash offer represents better value and greater certainty than the company’s existing standalone strategy.
