Private Equity Groups Approach IWG With Takeover Offer

Three private equity firms have made separate offer to Regus' holding company, International Workplace Group.
  • Regus’ holding company International Workplace Group has received separate offers from three private equity groups
  • In February this year IWG’s first takeover attempt by Brookfield and Onex fell through
  • Lone Star, Starwood, and TDR Capital have until June 8 to make a formal offer

In December last year, Regus’ holding company International Workplace Group (IGW) received all-cash offers from two of Canada’s largest asset management companies. Still, even though IWG’s majority holder Mark Dixon was “open to the possibility of a takeover”, the deal fell through a couple of months after when IWG rejected the Canadian Consortium’s  £2.5bn offer.

Yet, there is still a possibility that IWG will go private.

Earlier today, the Financial Times reported that IWG “has received separate takeover proposals from private equity groups Lone Star, Starwood and TDR Capital”. Just as it happened last year when Brookfield and Onex made offers, IWG’s shares rose today by 10% according to the Financial Times report.

Although the company issued a profit warning in October last year, it showed a strong recovery by the end of Q4, 2017. IWG has greatly expanded its workspace portfolio in the last year. In 2017 the company invested £162.3m in growth and added a total of 314 locations (Regus, Spaces, and other brands combined), with new locations already added this year.

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The news comes in the midst of property companies showing greater interest in the flexible workspace industry.The flexible workspace industry has grown exponentially in the past couple of years, to the point where coworking spaces have become “the new normal” even among corporate occupiers.

Additionally, with the upcoming Lease Accounting Standards set to kick in in January 2019, the flexible workspace industry is likely to experience increased demand as companies are likely to rethink their real estate strategy to include flexible workspace solutions.

The new provision will require that companies report and include long or new leases on their balance sheets; however short-term leases, under 12 months, will be exempt from the new provision, meaning that more companies are likely to use flexible workspace as an alternative real estate strategy.

Moreover, real estate owners are now aware that people are searching for experiences that allow them to seamlessly blend the lines of work, life, and play. This has led to an increased interest in property owners and landlords wanting to include coworking or serviced workspaces as part of their building amenities.

Lone Star, Starwood, and TDR have until June 8th to make a formal offer to IWG.

Coverage will continue as more details become available.