Brookfield weighs options after IWG rejects fresh £2.5bn bid
Canadian asset manager has 3 days to seal deal for UK-listed serviced office group
Canada’s Brookfield Asset Management is weighing up its options after a second takeover offer for UK-listed IWG that valued the serviced office group at £2.5bn was rebuffed, with just three days to go before a UK takeover deadline.
According to people close to the situation, Brookfield’s fresh bid for the company valued shares in IWG at 280p.
One of these people said IWG’s largest shareholder and founder Mark Dixon was inclined to sell the company, but that IWG’s other directors have resisted Brookfield’s overtures.
IWG’s share price rose 4 per cent on Wednesday. Brookfield now has until 5pm on Saturday to either put a firm offer on the table or walk away, according to the UK Takeover Panel code.
Brookfield made its first all-cash approach for IWG, the world’s largest serviced office group, alongside private equity group Onex last month. The latest offer was made late last week.
IWG operates in about 3,000 locations in 100 countries. It is known for its Regus brand but also operates a series of flexible shared offices under the Spaces name, where it faces stiff competition from US start-up WeWork.
SoftBank-backed WeWork is valued at roughly $20bn and has been expanding aggressively into London over the past year, offering short-term flexible leases to businesses ranging from start-ups to large corporates.
IWG struggled in 2017, issuing a profit warning in October that caused its shares to fall by more than a third in a day. The group blamed a “Brexit effect” in London and global “disruption” as a result of natural disasters in the US for the expected lower earnings.
Mr Dixon told the Financial Times in October that he was unconcerned by competition from WeWork, which operates in fewer cities.
The serviced office sector suffered in the early 2000s after the collapse of the dotcom boom. The US arms of both Regus and rival HQ Global Workspaces both entered Chapter 11 bankruptcy protection.
Mr Dixon, who currently owns about 25 per cent of IWG’s shares, has been selling down his stake since 2005, including a near £100m share in June when market speculation was rife about a potential takeover.
For Brookfield, an acquisition would be its highest profile UK deal since it teamed up with Qatar’s sovereign wealth fund to acquire Songbird, the holding company whose sole asset is a majority stake in the Canary Wharf Group, for £2.6bn, in 2015.
The Canadian asset manager is also pursuing a $15bn deal to buy the majority stake in US shopping mall owner GGP that it does not already own.
IWG and Brookfield declined to comment.