On 9 September, the Harworth Group plc (LON:HWG) Board published its response document in relation to the unrecommended cash offer by Peel Bidco for Harworth at a price of 172.5p per Harworth Share. Capitalised terms used but not defined in this announcement have the meanings given to them in the Response Document.
Creating a simpler, lower-cost and higher-returning platform
In its Response Document, the Harworth Board set out its plan to accelerate key initiatives that would result in a simpler, lower-cost, higher returning platform. Once completed, the Harworth Board believes that it can deliver higher and more sustainable returns for Harworth Shareholders, targeting a low double-digit Total Accounting Return in the longer-term.
One of the key initiatives identified in the Response Document was the alignment of Harworth’s operating model and cost base with a pure play powered land and industrial & logistics approach. As trailed in the Response Document, the Harworth Board is today publishing a Quantified Financial Benefit Statement, as appended in full to this announcement, providing more details on the key components of future cost savings.
- By the end of the financial year ending 31 December 2028, the Harworth Board expects to achieve total annualised run rate cost savings of at least £7.4 million (the “Quantified Cost Savings”), of which £1.3 million has already been realised through a headcount reduction programme initiated earlier this year and 94% is planned to be achieved by the end of 2027.
- The expected annualised run rate savings at the end of financial years ending 31 December 2026, 2027, and 2028 are £3.2 million, £6.9 million and £7.4 million respectively.
- Based on Harworth’s administrative expenses of £36.3 million over the 12 months to 31 December 2025, the Quantified Cost Savings represent a 20.4% reduction in Harworth’s administrative expenses.
The Harworth Board aims to exceed the Quantified Cost Savings within the timeframes outlined above, noting that the Quantified Cost Savings exclude further efficiencies and value which the Harworth Board believes will arise from the full implementation of Harworth’s digital transformation project, which has been implemented over the last two years and is due to complete later this year.
The timeline for achieving the Quantified Cost Savings is not the same as the timeline for completing Harworth’s transition to a pure play powered land and industrial & logistics specialist. The Harworth Board believes that costs can be reduced ahead of this transition being complete.
The Quantified Financial Benefits Statement, together with the bases of belief and principal assumptions, are set out in Part B of the Appendix to this announcement alongside reports from Harworth’s reporting accountants and financial advisers in Parts C and D of the Appendix respectively, as required under Rule 28 of the Code.
Continued rejection of the Unrecommended Offer
The Harworth Board remains unanimous and unequivocal in its rejection of the Unrecommended Offer, which, in its view, fundamentally undervalues Harworth and its near and longer-term prospects. The Response Document sets out in full the Harworth Board’s views on the Unrecommended Offer and the reason for the Harworth Board’s unanimous and unequivocal rejection of the Unrecommended Offer. Harworth Shareholders are strongly advised to read the Response Document in full before deciding what action to take in relation to their Harworth Shares.
THE BOARD RECOMMENDS UNANIMOUSLY THAT HARWORTH SHAREHOLDERS WHO HAVE NOT ACCEPTED THE UNRECOMMENDED OFFER DO NOT DO SO AND THAT HARWORTH SHAREHOLDERS WHO HAVE ALREADY ACCEPTED THE UNRECOMMENDED OFFER WITHDRAW THEIR ACCEPTANCES AS SOON AS POSSIBLE.
