News & Analysis

Is the rumour true or not? Either way, IWG stock is up

Andrew Saks, Tuesday, 29 June 2021

Gossip and rumour mongering are most certainly two methods of creating speculative activity, and there is none more practised than the mainstream tabloid media in getting a good story out in order to create the wagging of chins.

Today's insinuation that IWG, a publicly listed British company that leases office space, is the potential target of a $4 billion acquisition by US private equity firm CC Capital hits that spot firmly in the middle.

This morning, IWG, which was formerly Regus, a global business whose core activity is the leasing of office space, has been of great interest to market participants as its stock has actually risen for the first time in a very long time.

IWG has been one of the many casualties of the anti-business lockdowns that have been instigated by the Covid-ocracy that many Western countries have been forced to live under for the past 18 months and has been hit hard because of the mere nature of its business as the government issued stay-at-home orders to the proletariat, er I mean good, hardworking public whose taxes and vote puts the government in their seat in the first place.

This is perhaps a prolonged sore point for IWG and its shareholders, especially given the non-adherence to its own draconian rules by the British government whose senior officials could be seen engaging in elbow-bumping right-on photo shoots at the G7 meetings, and the subsequent antics of Mr Hancock last week.

All of this, plus the endless advertisements for tenders by large consultancy firms for Covid marshal contracts and NHS test and trace lasting years into the future would likely be important aspects studied by IWG shareholders and senior management.

Thus, plunging values have been the norm for months, until this morning.

Rather oddly, a sudden interest in IWG stock has been sparked, and the stock is up 2.23% this morning, equating to just over 6 points compared to yesterday's continuation of a downward spiral.

This is because New York's CC Capital has been cited by mainstream tabloid news sources as a potential buyer for the firm, valuing it at an astonishing $4 billion.

The figures upon which this possible deal is being speculated are interesting, as the reports from yesterday give the impression that IWG is worth $3 billion, yet IWG is being quoted as offering $4 billion, which is an odd valuation given that companies are usually valued at a percentage or multiple of net annual revenue.

Such a valuation would mean that the 28.5% stake held by founder and chief executive Mark Dixon would be worth more than £1 billion.

Just the mere thought that this could proceed brought interest and resulted in the share price rising. Now, however, there is a different story, in that news from the other side of the Atlantic, which is home to CC Capital, is countering the notion that this proposed deal even exists.

CC Capital cites the original Sky News report which inferred the deal is in the pipeline and rules it out as untrue.

CC Capital has also stated that as a consequence of its announcement, it will be barred under UK rules from making a bid for IWG for at least six months unless it receives the consent of the UK Panel on Takeovers & Mergers.

Given that the speculation is still omnipresent and that the panel in the UK has barred CC Capital from making a bid, it appears that there could have been some interest, and that 'could-have-been' is perhaps enough to stir interest in a company whose future looked bleak.

There is an old adage that says 'no news is good news', however in the case of IWG stock, it transpires that any news, good, bad, true or untrue, is enough to create investor interest.

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