CVC Capital Partners, an investor in Six Nations Rugby, has approached IWG regarding a possible spin-off of its internet division, The Instant Group.
The private equity investor of Six Nations Rugby has approached Britain’s largest serviced office provider regarding a £1.5bn merger that might lead to a bigger breakup of the firm.
CVC Capital Partners is among the buyout firms that have approached IWG, the FTSE-250 company formerly known as Regus, about acquiring its digital unit, The Instant Group.
Tim Rodber, the CEO of The Instant Group, has reportedly been promoting the company to several private equity groups in recent weeks, following a series of unsolicited contacts, according to banking sources.
According to reports, Wells Fargo was retained to assist IWG with the potential sale.
If a deal were to be consummated at a valuation of roughly £1.5 billion, it would exceed the current market value of IWG, whose shares have fallen by more than half in the past year.
This decline reflects investors’ fears about office demand during a recession, as well as IWG’s larger-than-anticipated half-year loss of £70 million, which was revealed in August.
IWG competes with WeWork, a New York-listed corporation.
Mark Dixon, the architect of IWG’s expansion into what the business characterizes as the world’s largest provider of hybrid workspace, has mulled over alternatives for taking the company private or splitting it up for years.
A signature, a premium city center brand, Regus, and Basepoint, which operates throughout England and Wales, are its parts.
IWG announced in March that it will merge its digital and technology assets with The Instant Business as part of a transaction in which the London-listed group would contribute £270 million in cash into the merged entity.
IWG stated in a trading update last week that “integration of IWG’s digital assets with the Instant platform is proceeding as planned and we are witnessing the EBITDA benefits of this as predicted.”
On Monday, it was unclear how far along The Instant Group’s negotiations with CVC and other private equity buyers were.
IWG conducts business from over 3,300 locations in 120 countries.
Mr. Dixon is rumored to believe that the company is grossly undervalued by public market investors, and has reportedly considered deals such as a merger with a US-listed special purpose acquisition company for Worka, an app that enables IWG clients to compare and reserve work locations at thousands of sites.
IWG shares were trading at approximately 137.3p on Monday morning, giving the business a market capitalization of £1.35bn.
IWG held exploratory discussions with CC Capital, a New York-based private equity group, over the sale of all or part of the company in 2013.
IWG has adopted a franchise model in recent years, selling properties in countries like Japan and licensing its brands to new operators.
Mr. Dixon is the only largest stakeholder in IWG, and in 2019 he considered taking the company private with Lone Star Funds, Starwood Capital, TDR Capital, and Terra Firma Capital Partners.
Earlier that same year, IWG rejected a 280p-per-share buyout offer from Brookfield Asset Management and Onex.
CVC and IWG both refused to comment.
