Office space provider IWG soars on sale of Japan business (updated)

TKP

15/04/2019 09:25

* Sells Japan business for about $420 mln
    * Sale comes as IWG looking to close or refurbish locations
    * IWG Shares jump 20 pct

 (Adds analyst comments, details, shares)
    By Shashwat Awasthi and Noor Zainab Hussain
    April 15 (Reuters) - British office space provider IWG Plc
 IWG.L  is to sell its Japanese operations to TKP Corp  3479.T 
for 320 million pounds ($418.8 million), sending its shares up
by almost a fifth.
    The company behind the Regus and Spaces brand has been
looking to close or refurbish locations in Britain and some
other markets to revive its business, which has been hit by a
weak property market in London and higher costs related to new
sites.
    IWG shares rose as much as 19.8 percent in early trade.
Including Monday's gains, IWG's stock has climbed more than 52
percent this year. The FTSE 250 company's shares had come under
pressure after takeover talks with five separate suitors fell
through last year.  urn:newsml:reuters.com:*:nL3N21X1RP
    Last month, IWG had said it would revamp some locations
including in Britain after reporting a dip in its full-year
operating profit.  urn:newsml:reuters.com:*:nL3N20T1TY
    "More sales will follow, which should further validate the
new strategy, release substantial value and lead to a complete
re-appraisal of the company. Special dividends or cash returns
seem likely," Peel Hunt analyst Andrew Shepherd said.
    Shepherd said the Japanese business accounted for 4 percent
of IWG's core earnings. 
    Credit Suisse upgraded IWG to "outperform" from
"underperform" and raised its price target to 328 pence from 200
pence, saying the company was beginning an "evolution towards a
franchise model with consequent benefits."
    As part of the TKP deal, the Japanese group will buy 130
flexible co-work centres operated by IWG in Japan and will have
exclusive use of IWG's Regus, Spaces and OpenOffice brands in
the country.  urn:newsml:reuters.com:*:nRSO1253Wa
    IWG said the deal achieved an attractive valuation for IWG's
shareholders and re-affirmed the company's strategy of capital
efficient growth in IWG's global network with an increased
emphasis on partnerships.
    Chief Executive Mark Dixon, who is IWG's biggest investor
with a 27.25 percent stake, will join TKP board as a
non-executive member. The deal needs antitrust clearance in
Japan and is expected to close in May, IWG said.
    
    ($1 = 0.7641 pounds)

 (Reporting by Shashwat Awasthi in Bengaluru; Editing by Bernard
Orr/ Gopakumar Warrier/Jane Merriman)
 ((Shashwat.Awasthi@thomsonreuters.com; within U.S.+1 646 223
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