Will Regus Sell And Go Private? IWG Gets All-Cash Offer From Brookfield And Onex

Brookfield and Onex have approached International Workplace Group (IWG) about an all-cash offer
  • Two of Canada’s largest asset management companies approached IWG about an all-cash offer
  • IWG’s shares soared after announcement of the potential bid from Brookfield and Onex
  • Regus’ Chief Executive and Founder, Mark Dixon, reportedly ‘open to the possibility of a takeover’

The Holding company of Regus and Spaces, International Workplace Group (IWG), recently confirmed rumors that two of Canada’s largest asset management firms approached the company about an all-cash offer.

Following the announcement, Regus’ shares–which had seen a significant dip since Dixon’s announcement in October about lower profit for this 2017–soared, according to various reports.

“Shares of IWG, formerly known as Regus, climbed 30 percent Wednesday after the company confirmed that Brookfield Asset Management nand Onex made an ‘indicative proposal’ to take the company over.” –The Times, December 27, 2017

The announcement also comes shortly after IWG’s coworking arm, Spaces, signed a 10 year, 103,000 square-foot lease at Brookfield Property Partners’ 424-434 West 33rd Street building in Manhattan.

Brookfield and Onex aren’t the first private equity firms to see and bet on the value of flexible workspaces. Earlier this year, Blackstone bought The Office Group, a leading UK serviced workspace provider. The acquisition marked a new era for The Office Group, as well as for the rest of the industry, especially following Blackstone’s head of European real estate, Anthony Myers, statement to Reuters that:

“The traditional workspace is being redefined in gateway cities across the globe, as evolving business practices increase demand for flexible office space.”

Similarly, asset manager group, The Carlyle Group, announced the acquisition of coworking company Uncommon.

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Brookfield and Onex seem to be following The Carlyle Group and Blackstone’s steps, though this isn’t Brookfield’s first endeavor into the flexible workspace industry. Earlier this year, the asset management company announced a partnership with NYC-based Convene to “help Brookfield elevate and amplify the service and hospitality offerings of their 8.6 million square foot Class A office portfolio in the burgeoning Downtown Los Angeles market.”

From Regus’ perspective,  reports claim that Mark Dixon is open to the possibility of a takeover. Frank Cottle, industry expert, believes this is a smart move from Regus, stating that “Regus’ public valuation is well below WeWork’s private valuation and it makes perfect sense to take Regus private to accelerate its continued growth without the short term worries of public shareholders.  If Regus goes private, I like the potential on a number of fronts, and kudos to Mark Dixon for creating such amazing value as one of the original  bootstrapping entrepreneurs of our industry.”

Without a doubt the flexible workspace industry is experiencing an influx of CRE and asset management companies into the playing arena. These companies have deep pockets that can fuel flexible workspace growth across markets, though how exactly these investments will affect the industry in the long-term remains to be seen.

The industry is currently receiving massive amount of capital. Speaking about this, Cottle reflects on the Dot.Com era boom. “Back then, we had the same industry focused capital, and it created some amazing companies that we are all familiar with today. However, we also had the Dot.Com bomb of 2002, which showed that an overvalued market (or company) can destroy itself almost overnight.”

Still, Cotte remains unworried; adding that for foreseeable future “the industry’s future is so bright we should all be wearing shades.”

Brookfield and Onex are required to announce an offer to IWG by January 20th.