One of the world’s largest office rental operators IWG (IWG) saw a massive sell-off in its share price on Monday (6 August) as the group walked away from three potential takeover suitors.

Private equity firms Starwood Capital, Terra Firma and TDR have all been told by IWG management to take their buyout interest elsewhere. This extends the lists of investment firms that have cast covetous glances IWG’s way in recent months, only to be told to buzz off. Onex, Brookfield and Prime Opportunities have all failed to win the IWG board’s backing, and now Starwood Capital, Terra Firma and TDR have also walked away.

This is evidently frustrating investors, sparking a 21%-plus slump in IWG’s share price to 236p.

GLOBAL FLEXIBLE OFFICE SPACE SCALE

IWG is a £2bn-plus market value business with a long list of blue-chip clients. But it has been under pressure from a new wave of emerging competitors, most notably the US shared office space group WeWork.

This is illustrated by a 29% fall in first half operating profit, also announced today, despite revenues increasing 7% in the six months to 30 June.

Investors seem to fall into one of two camps; those that back the IWG board’s confidence its own future as an independent business, and those that think IWG is demanding too high a price and that a deal is there to be done? and should be.

IWG shares have been nothing if not volatile over the past year or more, with tough competition sparking a profit warning back in late 2017, triggering the takeover speculation.

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Issue Date: 06 Aug 2018