June 22, 2018 / 4:55 PM / in 5 months

Exclusive: Terra Firma approaches IWG about joining bid battle for offices firm - sources

LONDON (Reuters) - Private equity firm Terra Firma has approached IWG (IWG.L) about a possible bid for the $3.8 billion London-listed serviced office provider and entering a takeover battle for the company, according to two people with knowledge of the matter.

FILE PHOTO - British financier Guy Hands arrives at Manhattan Federal Court in New York October 19, 2010. REUTERS/Brendan McDermid

If Terra Firma, which was founded by financier Guy Hands, makes a bid, it would set up a four-way fight for the FTSE 250 workspace provider best known for its Regus brand.

British private equity fund TDR Capital and American real estate investment groups Starwood Capital and Prime Opportunities have already made approaches to IWG, which has a market capitalization of about 2.9 billion pounds ($3.8 billion).

A fourth suitor, Lone Star, scrapped its bid for the company earlier this month.

They are vying for control of a business that has offices in about 3,125 locations around the world, giving it around 52 million square feet in more than 110 countries.

The battle for IWG comes amid growing interest in the flexible workspace industry as working habits change and the demand for office providers grows.

Last year, WeWork secured $4.4 billion of investment from Japan’s SoftBank that gave the U.S. co-working start-up a $20 billion valuation.

IWG was founded in 1989 by British entrepreneur Mark Dixon, who remains its chief executive. Dixon holds a 25.4 percent stake in the company, meaning he will play a key role in deciding whether the business is sold.

A previous attempt to take IWG private failed earlier this year. Canadian firms Onex and Brookfield Asset Management made a joint bid in December, only for takeover talks to collapse at the start of February.

IWG was left vulnerable to a bid approaches after its shares tumbled last October, when it rattled investors with a profit warning that it blamed on a slowdown in the London market and the impact from natural disasters overseas.

Pretax profits slid 14 percent to 149.4 million pounds last year.

Under Britain’s rules, Prime Opportunities has until June 26 to decide whether to make an offer, and Starwood and TDR have until June 29.

Spokesmen for Terra Firma and IWG declined to comment. IWG shares closed up 1.2 percent at 316.5 pence.

Reporting by Ben Martin and additional reporting by Dasha Afanasieva; Editing by Elaine Hardcastle and Mark Potter

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