Harworth Group (LON: HWG), the land regeneration company, has agreed to be bought by Peel Holdings after the property and infrastructure group raised its cash offer to 187p a share, valuing the company at approximately £631.7 million.
The board’s about-turn follows two rejected lower bids and comes as Peel and its concert parties have built a majority stake in the company.
Harworth shares jumped over 5% on the news, closing at 187p on Friday, up from 178p the previous close and a new 52-week high, with the price touching 195p intraday.
Peel, the Whittaker family’s property and infrastructure group, first bid 172.5p for Harworth on the 6th of August, a move the Harworth board rejected as undervaluing the company. Peel came back with 177.5p on 16 September, a rise that pushed its stake past the 30% threshold and triggered a mandatory offer under Takeover Code Rule 9; Harworth’s board again told shareholders to reject it. On Friday, Peel returned with a “best and final” 187p offer, and this time the board recommended acceptance.
The 187p price is 8.4% above Peel’s original 172.5p bid and a 30.2% premium to Harworth’s undisturbed close of 143.6p on the 5th of August, the day before the first approach. The board cited weak share liquidity, a concentrated shareholder register and a difficult economic backdrop for reversing course, noting Harworth shares had closed at or below 187p on 98.2% of trading days over the past five years. The offer is still a 10.4% discount to Harworth’s diluted net asset value of 208.8p a share at the end of June, though that gap is narrower than the average 28.2% discount over the prior three years.
Harworth’s board said its recommendation followed careful consideration of the improved terms.
While the Harworth Board has confidence in the group’s standalone strategy and future potential, the recommendation follows careful consideration of the best and final offer and engagement with Harworth shareholders.
Harworth Group board
By today’s acceptance update, Peel and its concert parties held 61.38% of Harworth’s issued share capital, with only 0.68% coming from new independent acceptances. The offer needs more than 50% of voting rights to succeed and closes at 1pm on the 25th of October.