IWG said to have held £4bn takeover talks with US PE firm CC Capital

Workspace provider IWG has reportedly been in talks with New York-based private equity firm CC Capital about a possible £4bn takeover.

According to Sky News, CC Capital has held talks with IWG about a prospective bid in the last month but it was not known whether they are ongoing.

Sky cited a property industry source as saying that any offer would need to be lodged at a "very significant" premium to the current share price to stand a chance of being recommended IWG’s board.

It was understood that CC Capital has enlisted advisors from banks to work on a prospective bid.

IWG - which trades under the brands Regus, Spaces and The Clubhouse - declined to comment on the Sky story.

At 0810 BST, IWG shares were up 8% at 324.33p.

Broker Peel Hunt, which rates IWG at 'hold', said: "Whilst this is quite possible, we have been here so many times before that an actual bid, at a level that Mark Dixon would accept, seems unlikely to us.

"Last time, in 2018, somewhere in the range of 320-350p did not do it. Since then, some Master Franchise sales at high EBITDA multiples, an equity raise, a bond re-financing, substantial closures, rent renegotiations and all the Covid-linked changes to forecasts make that price of little relevance.

"We still see scope for downgrades to FY22E (Y/E December) later in the year."

Broker Liberum said: "We suspect that any PE interest - if true - is looking through short-term trading challenges and toward the longer-term upside potential as employers increasingly shift to hybrid working practices twinned with employee’s growing requirements for quality office space.

"Our own prior analysis shows that the average of the last five bids in the UK property sector is a 28% premium to the undisturbed share price, which would value IWG at £3.9bn. We acknowledge that clearly IWG is not a ‘traditional’ real estate company given its capital light, platform and franchise model. Although the UK represents 16% of IWG revenue and is 21% of assets, we still expect some read across to UK Office stocks given the rumoured bid interest adds to the belief in both a general return to work and that quality space wins out."