IWG is adding One World Trade Center space to portfolio
IWG Plc, the serviced-office company being pursued by several private-equity firms, said its UK operations are falling short of management expectations and that increased investment in its network will erode earnings.
The owner of the Regus brand will now add the equivalent of more than twice the office space at One World Trade Center to its portfolio this year, 17pc more than previously forecast.
The additional space, together with the issues in Britain, will reduce group operating profit by as much as stg£20 million.
Management is taking action to address the weak performance in the UK, the firm said in a statement. Revenue from that country fell 2.9pc last year to almost stg£400m, the only region to see a drop, according to an investor presentation in March.
IWG fell as much as 7.1pc, the most since February 1, and was down about 3pc yesterday in London trading.
The rapid growth of WeWork Cos - the SoftBank Group Corp-backed company with a $20 billion valuation - has helped spark a spate of deals in the serviced-office market.
IWG has been in play since December, when it received an indicative offer from a venture between Brookfield Asset Management Inc and Onex Corp following a profit warning.
In February, the two companies walked away without making a formal offer.
Lone Star Funds ended its pursuit of Zug, Switzerland-based IWG earlier this month, while a number of private equity firms may still make offers for the firm.
Prime Opportunities Investment Group LLC, Starwood Capital Group LLC and TDR Capital LLP have shown interest in the company.
The approaches for IWG, the industry's biggest company, came after Blackstone Group LP last year bought the Office Group in a deal that valued the co-working company at about stg£500m. (Bloomberg)