£560m wiped from office firm after takeover fails
Shared office business IWG has managed to bat away all three of its keenest suitors, saying none of them could deliver a takeover worth agreeing to.
Just last month, IWG asked the Panel on Takeovers and Mergers to give it more time to weigh up approaches it had received from property investor Starwood Capital and private equity firms Terra Firma and Tdr.
None of the parties were able to reach an agreement, as IWG said it still ‘ has an exciting future as an independent public company’.
Terra Firma, Starwood and Tdr all released regulatory statements saying they ‘[did] not intend to make an offer’, within seconds of IWG announcing it was not seeking to continue discussions.
Shares sank 20.5pc, or 61.5p, to 238.5p – almost the mirror image of the rise which occurred as investors got excited about the prospect of a takeover. It was a share fall worth about £560m.
It also revealed half-year results yesterday, which showed operating profit had plummeted 29pc to £60m as a result of investments, increased marketing spend and ‘weakness in the UK’.
russ Mould, investment director at broker aJ Bell, said IWG’s argument that the recent bids undervalue the company ‘ holds rather less water when the company has just announced a near 30pc decline in operating profit’.
Nonetheless, revenue was up 7.1pc – with the effects of currency swings eliminated – to £1.2bn, while an 11pc hike in the dividend to 1.95p per share showed IWG’s confidence in the future. Private hospital firm Spire
Healthcare was also one of the market’s casualties, as it warned revenues in the first half of the year were down 1.1pc to £475m. The UK’s second-largest private healthcare provider was particularly hit by public sector belttightening, as NhS work accounts for a third of its turnover.
revenue in that division dropped by 9.5pc, while revenue in its private sector arm grew by 2.9pc.
Spire’s shares hit an all-time low, ending the day down 21.8pc, or 53.8p, at 193.4p. Woodford Investment Management, the firm run by stock-picker Neil Woodford, is Spire’s second largest shareholder. his 9.6pc stake lost £20.8m in value in just one day.
Spire did say that it expected revenue growth from its private sector branch to increase in the second half of the year, but this would be impacted ‘by continuing weakness in the NhS business where we see new signs of further NhS triaging and rationing’.
The management did not quantify just how bad 2018 would be and simply said that earnings would be ‘materially lower’.
Investors in the John Laing Infrastructure Fund, however, had a better day. The company, an investment trust which ploughs cash into construction projects such as new hospitals, told investors they should accept a £1.4bn takeover offer.
Fund managers dalmore Capital and equitix teamed up to buy the fund for 142.5p per share plus a 3.57p dividend, which is 23.6pc higher than it was trading at before the offer. Its shares yesterday climbed 3.4pc, or 4.8p, to 144.8p.
Mould thinks the deal could prompt a flurry of activity from other buyers in the infrastructure fund space, since the projects often offer reliable cash flow.
The FTSE 100 ended the day up 0.06pc at 7663.8 points, holding up last week’s rebound from July lows despite continuing US-China trade war fears.
at the smaller end of the market, self-storage company Lok’n
Store presented a tidy picture as it said in an update that its revenue had risen 6pc in the year ending July 31. Shares rose 1.2pc, or 5p, to 407.5p in anticipation of the full results in October.