WeWork rival IWG has £4bn bid talks with CC Capital

IWG, the world’s largest serviced office group and rival to WeWork, has been in secret talks about a potential takeover offer that could value the company at more than £4bn.

Sky News has learnt that CC Capital, a New York-based private equity firm, has held discussions with Regus-owner IWG about a prospective bid in the last month.

It was unclear on Monday evening whether the talks were still ongoing.

One property industry source said that any offer would need to be lodged at a “very significant” premium to IWG’s current share price to stand a chance of being recommended by the company’s board.

On Monday, shares in the company closed down 2.3% on the day at 300.2p, giving it a market capitalisation of about £3.1bn.

Factoring in a conventional private equity premium implies that a successful offer would need to be worth at least £4bn.

CC Capital is said by bankers to have enlisted advisors from banks to work on its prospective bid.

The takeover interest in IWG, which trades under brands including Regus, Spaces and The Clubhouse, comes during a period of uncertainty over future demand for long-term and temporary office space after the pandemic.

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.

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Earlier this month, 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.

The new business model was the brainchild of IWG’s founder Mark Dixon, who remains chief executive and the company’s biggest individual shareholder.

Its talks with CC Capital are the latest example of a large London-listed company attracting interest from private equity suitors.

Earlier this month, Sky News revealed that Clayton Dubilier & Rice (CD&R) was preparing a takeover bid for Morrisons, Britain’s fourth-biggest supermarket chain.

Others to have received bids since the spring include St Modwen, the property company which has agreed to be bought by Blackstone; John Laing, the infrastructure investor which is to be taken private by KKR; UDG Healthcare, a healthcare group which is also being bid for by CD&R.

Mr Dixon 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.

CC Capital has a track record of buying large companies, including Dun & Bradstreet, the commercial data provider.

The buyout firm was founded by Chinh Chu, who was previously a top executive at Blackstone, one of the world’s biggest private equity investors.

CC Capital has also launched a series of special purpose acquisition companies (SPACs) in partnership with the asset manager Neuberger Berman.

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.

A public relations adviser to CC Capital said his client could not be reached for comment.

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