IWG Ends Takeover Talks With Private Equity Groups

• In May this year, private equity groups Lone Star, Starwood, and TDR Capital approached International Workplace Group with a takeover offer
• The deals have since fallen through, as none of the parties were willing to pay “a recommendable price”
• IWG’s inability to sell begs the question on whether WeWork is truly worth US$20 billion

In May this year, International Workplace Group began talks with three private equity groups about a potential takeover. In late July, the serviced workspace company extended the deadline for said groups to make an offer.

The new deadline was set for August 7th, today. However, yesterday afternoon The Guardian reported that IWG “said it had ended takeover talks with three private equity suitors, meaning it has had unsuccessful negotiations with six would-be bidders in short order. ‘None of the interested parties is currently capable of delivering an executable transaction at a recommendable price,’ IWG said. Its shares fell 20%.”

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If WeWork Is Worth $20 Bn, Why Can’t Regus Sell For £2.8 Bn?

According to The Guardian, Regus’ holding company hasn’t been able to land a buyer willing to pay £2.8 billion for it. This is especially surprising if we compare IWG to WeWork. Both companies are in the flexible workspace industry (also known as workspace-as-a-service), and despite the fact that IWG has been in business 21 more years than WeWork has, WeWork’s valuation (US$20 billion) is almost 7 times higher than IWG’s.

Experts have argued that both companies are the same, with one even claiming that “WeWork is basically Regus with a paint job.”

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WeWork has long faced skepticism around its business model and valuation, with many believing the company is overvalued and is doubting whether it can survive an economic downturn.  At Allwork.Space we’ve already addressed why we believe WeWork’s valuation is sky-high even though it’s still declaring losses.

IWG’s inability to sell begs again, the question on whether WeWork is truly worth as much as it claims.

“The fact that no would-be bidder has been prepared to pay a silly takeover price should send a message across the Atlantic. Yes, IWG is suffering a few headaches in the UK and pre-tax profits fell by a third to £54.3m at the half-year stage. But, on any normal measure, it should still be worth more than WeWork. The moral of the non-bids for IWG is surely that the sceptics are right and that WeWork is overvalued,” The Guardian argues.

Suggested reading:

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• Will Regus Sell And Go Private? Iwg Gets All-cash Offer From Brookfield And Onex
• Is Wework’s Bubble Bursting? Who Knows?
• Wework’s Crippling Costs Are Outpacing Its Revenue

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