Serviced office giant IWG explores multibillion pound break-up plan

IWG, the serviced offices giant behind Regus and Spaces, is exploring a multibillion pound break-up that would involve splitting it into several distinct companies.

Sky News has learnt that Mark Dixon, IWG’s founder and chief executive, is in the early stages of examining a series of corporate actions that he believes would crystallise significant value for the company’s shareholders.

Insiders said on Sunday that Mr Dixon was examining options including a US listing for Worka, an app that helps IWG clients to compare and book places to work in more than 3000 locations around the world.

That listing could be achieved through a flotation or merger with a special purpose acquisition company (SPAC), they added.

Under the plans being explored, a break-up of IWG could also entail separating its owned-property arm from its global franchising operation, although a source close to the company insisted that a suggestion that Mr Dixon would take the property company private himself was inaccurate.

At Friday’s closing share price of 286.7p, IWG had a market capitalisation of £2.9bn, although Mr Dixon is said to believe the true value of the company’s assets is double that sum, making a break-up worthy of consideration.

Bankers have yet to be formally hired to work on the ideas, although Barclays and HSBC, IWG’s corporate brokers, are understood to be involved, as is Rothschild, which has been discussing the US listing with Mr Dixon, according to banking sources.

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Another insider said that although the plans were under discussion, there was little prospect of an imminent formal announcement.

It is the latest in a series of plots explored by IWG’s founder in recent years which have included an outright sale of the group on several occasions.

Earlier this year, IWG held tentative talks with CC Capital, a New York-based private equity firm, about a sale of part or all of the company.

The latest spate of potential corporate activity at IWG, which counts WeWork as an increasingly important rival, comes amid uncertainty over post-pandemic demand for long-term and temporary office space.

Many companies are announcing permanent shifts to hybrid working, with employees allowed to base themselves at home or other non-office locations for at least part of the time.

In June, IWG warned the City that underlying earnings this year would be well below their 2020 level, and said the “overall improvement in occupancy across the whole group has been lower than previously anticipated as a result of the prolonged impact of COVID-19”.

It said, however, that it expected a strong recovery in its performance next year.

In recent years, IWG has adopted a franchise model which has seen it sell assets in countries including Japan and license its brands to new operators.

Mr Dixon, who is IWG’s single-largest shareholder, is no stranger to conversations with private equity bidders.

In 2019, he held talks with Lone Star Funds, Starwood Capital, TDR Capital and Terra Firma Capital Partners but abandoned the negotiations after they failed to produce an offer that could be recommended to shareholders.

Earlier that year, IWG rejected a takeover bid from Brookfield Asset Management and Onex which valued the company at 280p-a-share.

IWG’s rival, WeWork, is preparing to become a publicly traded company in New York after agreeing a deal in March to merge with another SPAC.

The combination is expected to value WeWork at approximately $9bn – a fraction of what it was worth prior to its near-collapse in 2019.

IWG declined to comment on Sunday.

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