MergerMarket
IWG shareholders have yet to hear from possible bidders
15 MAY 2018
- WeWork valuation bolsters price expectations
- Two shareholders plan to march in lockstep with IWG board
Two top IWG [LON:IWG] shareholders told this news service that they have yet to be consulted by any of the company’s three suitors about their possible offers.
Both shareholders said they will follow the lead of IWG’s board when choosing whether – and with which of the three potential bidders – to tender their shares. One of them said he has been in frequent contact with IWG but will defer to the board’s judgment on any offer.
IWG confirmed last week (11 May) that it is evaluating fresh takeover approaches from TDR, Lone Star and Starwood Capital; IWG shares had closed at 227.2p the previous day and now (15 May) trade at 307p. This renewed interest comes after IWG rejected a 280p/share joint bid by ONEX [TSX:ONEX] and Brookfield [TSX:BAM.A] in January that valued the company at GBP 2.5bn.
As an office-space provider active in more than 100 countries, IWG is a unique asset and should not be sold easily, the second shareholder said. IWG could be worth anywhere between 300p/share and 2,000p/share, the shareholder said, and he will sell if founder Mark Dixon sells and hold if Dixon holds.
In June 2017, Dixon sold a 3% stake in the company for 345p/share, the shareholder noted. Later that summer, price expectations were inflated by SoftBank’s [TYO:9984] USD 4.4bn (GBP 3.3bn) investment in WeWork, a similar but smaller company. Though it applies a tech-sector valuation to WeWork, SoftBank’s investment suggests a price near 2,000p/share for IWG, the shareholder said.
This news service reported in February that sector bankers consider WeWork to be no more than a loose comparable for IWG. IWG’s managed properties are split between those it leases and owns, while WeWork’s are leased; WeWork is far smaller on a square-footage basis.
Even on the heels of a profit warning in October that sent IWG shares tumbling to a low of 188.9p, the previous consortium’s 280p/share was indeed a lowball offer, the first shareholder said. Dixon and the board were right to turn it down, especially given the value implied by SoftBank’s WeWork stake. The shareholder said he would follow Dixon’s lead when deciding whether to accept the next bid.
IWG, TDR and Lone Star declined to comment. Starwood did not respond for comment.