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(Sharecast News) - Property regeneration specialist Harworth Group on Wednesday reiterated its rejection of a 172.5p-a-share takeover offer from Peel Holdings, arguing that the bid "fundamentally undervalues" the company, as it separately reported a first-half loss amid pressure on residential valuations.
Peel Pepper, a company indirectly wholly owned by Peel Holdings, launched its cash offer in August for the Harworth shares it does not already own. Peel-linked entities already control around 30% of Harworth, with the 172.5p offer pitched at a 36% premium to the three-month volume-weighted average share price prior to the bid.
However, Harworth claims the proposal represented a 19.7% discount to its EPRA net disposal value of 214.8p per share at the end of June. Including what it sees as additional embedded value in its data-centre and industrial and logistics pipelines, as well as recurring income from planning promotion agreements, Harworth estimated potential group value at 297.4p per share, putting Peel's offer at a 42% discount.
The board unanimously recommended that shareholders reject the offer, describing its timing as "highly opportunistic" and arguing that Peel would otherwise capture future upside from investments already made in the business.
The renewed defence came alongside Harworth's results for the six months to 30 June, which showed revenue falling to £41.3m from £47.5m a year earlier, while the company swung to a pre-tax loss of £31.4m from a £7.4m profit.
EPRA net disposal value fell to £697.7m, or 214.8p per share, from £725.0m and 223.7p respectively a year earlier, while Harworth recorded a negative total accounting return of 3.7%, compared with a positive 1.1% previously.
The decline principally reflected a £16.9m negative residential valuation movement as softer housebuilder demand and higher costs weighed on the portfolio.
Harworth said it was accelerating plans to exit residential and become a pure-play powered-land and industrial and logistics specialist. Its pipeline includes 0.8GW of accepted power offers, with a final plot sale to Microsoft at Skelton Grange progressing and the group now in exclusivity with a data-centre provider over a second hyperscale site.
Chief executive Lynda Shillaw said Harworth had made "good operational and strategic progress" despite a challenging macroeconomic backdrop, adding that its land and development pipeline was seeing strong demand across industrial and logistics uses and data-centre sites.
The interim dividend was increased 10% to 0.592p per share.
The stock was more or less flat at 176.4p by 1327 BST.
See the latest RNS on Investegate.