Office rental pioneer makes £600m as he sells empire
BRITISH tycoon Mark Dixon is in line for a £600m payday after Canadian funds made an approach to buy his global office empire.
The 58-year- old built IWG, formerly called Regus, from nothing into a £1.8bn business but is on the verge of selling it.
IWG says joint takeover talks are under way with Onex Corporation and Brookfield Asset Management, the biggest real estate manager in the world. They have yet to make a formal offer but the prospect of a deal sent shares soaring by more than 27pc yesterday.
It was the first time markets had been open since bosses revealed they were considering a deal on Saturday. Analysts said rival bidders could also emerge.
Dixon, IWG’s biggest shareholder, holds a 25pc stake in the firm.
He is estimated to be worth about £900m by Forbes but could trouser another £600m if IWG is taken over for a reported £2.5bn.
The father- of-five, who sold hot dogs after leaving school in Essex, founded Regus in 1989.
He is said to have had the idea for the firm after sitting in a cafe in Brussels and noticing the lack of office space for travelling business people, as they were holding meetings at tables around him.
IWG now runs Regus, Open Office and Signature offices across 3,000 locations in 1,000 cities, with annual sales of £2.2bn. But its shares have fallen over the past year in the face of tough competition from rivals such as US-based WeWork. Despite having far fewer locations, WeWork’s valuation is more than eight times higher – at almost £15bn. It has attracted trendy technology startups with perks such as free beer and prosecco, helping to rapidly expand its presence in London. IWG took another hit when it issued a profit warning in October, sending its shares plunging by more than 32pc in a day. However Andrew Shepherd-Barron, an equity analyst at Peel Hunt, said the company offered a ready-made global brand.
He said: ‘Much depends on founder Dixon’s attitude, but the approach could lead to IWG finally being taken over after a long and frequently volatile relationship with the equity market. The approach is from private equity at the moment, but we see potential bidders from a range of parties.’
IWG said it had ‘received an indicative proposal’ from Brookfield Asset Management and Onex Corporation for a possible cash offer to buy out the company.
In a statement, it added: ‘There can be no certainty that any offer will be made, nor as to the terms on which any offer might be made.’
Brookfield and Onex now have until January 20 to put forward a firm proposal. IWG founder Mark Dixon was an entrepreneur from the moment he left school.
The Essex lad’s first venture was selling peat from a wheelbarrow to a local housing estate. He then began a sandwich making business called Dial-a-Snack. When this failed he travelled the world and was a barman, a miner in Australia and also sold encyclopedias.
Back in the UK he bought a burger van for £600, but having struggled to find good baps, set up a firm called the Good Bread Roll company which he eventually sold for £800,000.