Brookfield and Onex eyeing takeover of WeWork rival

Shares in the shared-office provider, now known as IWG, soared after the news hit

TRD New York /
Dec.December 27, 2017 12:31 PM

From left: IWG’s Mark Dixon, Brookfield Asset CEO Bruce Flatt and a IWG space

Shares of IWG, formerly known as Regus, climbed 30 percent Wednesday after the company confirmed that Brookfield Asset Management and Onex made an “indicative proposal” to take the company over.

IWG said there was “no certainty” that the two Canadian private equity firms would make an offer, nor what their terms would be, the Financial Times reported. But the company’s shares soared on Wednesday in London, a substantial turnaround for a company that lost almost a third of its value on a single day in October after it warned that 2017 earning would fall substantially short of management’s forecasts.

IWG blamed a “pause” in a previous recovery of sales at older office sites, as well as disruption in London pegged to Brexit and natural disasters in the U.S., the FT reported.

The company is valued far below its much-younger competitor WeWork, which is valued at $20 billion after an investment from Japanese conglomerate SoftBank.

“The approach is from private equity at the moment, but we see potential bidders from a range of parties, including global real estate developers, or those with a global ambition,” analysts at the stock brokerage Peel Hunt wrote in a letter to clients.

Peel Hunt added that IWG “is a global brand with established positions in every significant country” and is “highly cash generative and minimally financially geared.”

IWG’s biggest shareholder is its chief executive and founder Mark Dixon, the Essex-born former sandwich-seller who started the company in 1989 when he noticed business people holding meetings in cafes. The company has roughly 3,000 office centers in 1,000 cities.

The FT, citing Peel Hunt’s letter, said Dixon wants prefer to remain involved if a buyout materializes.

Brookfield Property Partners is an investor in the meting-space startup Convene.

IWG’s “Spaces” co-working brand recently signed a 103,000-square-foot lease at Brookfield Property Partners’ 424-434 West 33rd Street.  [FT]Rich Bockmann

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