- 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 โa recommendable priceโ
- IWGโs 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 โsaid it had ended takeover talks with three private equity suitors, meaning it has had unsuccessful negotiations with six would-be bidders in short order. โNone of the interested parties is currently capable of delivering an executable transaction at a recommendable price,โ IWG said. Its shares fell 20%.โ
If WeWork Is Worth $20 Bn, Why Canโt Regus Sell For ยฃ2.8 Bn?
According to The Guardian, Regusโ holding company hasnโt been able to land a buyer willing to pay ยฃ2.8 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, WeWorkโs valuation (US$20 billion) is almost 7 times higher than IWGโs.
Experts have argued that both companies are the same, with one even claiming that โWeWork is basically Regus with a paint job.โ
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. ย At Allwork.Space weโve already addressed why we believe WeWorkโs valuation is sky-high even though itโs still declaring losses.
IWGโs inability to sell begs again, the question on whether WeWork is truly worth as much as it claims.
โThe 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 ยฃ54.3m 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,โ The Guardian argues.
Suggested reading:
- Will Regus Sell And Go Private? Iwg Gets All-cash Offer From Brookfield And Onex
- Is Weworkโs Bubble Bursting? Who Knows?
- Weworkโs Crippling Costs Are Outpacing Its Revenue
