Regus gives market strength indicator with winter spending spree
Regus Plc, the industry leading serviced office provider, end 2012 with three major corporate acquisitions in the pipeline.
The company has tabled a £40m bid to try to end their year-long wrangle for the takeover of rival MWB Business Exchange – London’s largest serviced office provider.
In addition, the assets of US-based Regent Business Centers and Corporate Office Centers have been officially assimilated into the Regus portfolio, representing an aggressive acquisition rate that seemingly marks an end to the barren years of economic turbulence.
Brian MacMahon, CEO of YourOfficeAgent, said: “This industry consolidation has been happening for 30 years but it’s excellent to see aggressive growth again after a few slow acquisition years”.
Regus hope to utilise the prospective merger with MWB as a springboard from which to expand their business centre portfolio into previously un-charted markets.
MWB Group has confirmed it is “now commencing a sale process for some or all of the 75.22 percent of the BX Shares currently held by an indirect wholly-owned subsidiary of MWB”, in a process that is expected to run through to Feb. 16, 2013.
Marley Acquisitions Ltd, Regus’ fully owned subsidiary, offered 61.576p per share to shareholders at MWB, representing a premium of approximately 20% on the stock’s close on December 20th.
Should the deal proceed successfully, the serviced office provider hopes to streamline MWB’s portfolio by identifying centres in duplicate areas, as well as making efficiency savings by reducing the group’s overall headcount.
Regus has also announced plans to delist the group’s shares from the London Stock Exchange.
MWB Group Holdings, who run 26 hotels across the country, already own a 72.22% stake in MWB Business Exchange, and also provided a working capital for the group of between £3m and £5m per quarter between Q2 in 2011, and the same period in 2012.
In November, MWB Group Holdings filed a notice of intention for the appointment of administrators, leaving just eight weeks to find another potential buyer, Regus revealed in a statement.
Regus – who have outlined their intention to fund the deal with instantly available cash - are insistent that, should another bid be lodged, they would revise their offer to surpass it, leaving MWB powerless to resist if the offer meets certain criteria.
Up to the year end on 30th June 2012, MWB had registered a net loss on its on-going operations of £14.8m before tax, with a revenue stream of £121.1m.
Upon hearing the news of an intended takeover, Regus’ stock was trading 3% up at 104.215p on London’s AIM by 08:21 GMT, December 21st, whilst MWB witnessed a rise of 15%.
Although Regus were not available for comment, Frank Cottle, CEO of Alliance Business Centers, claims that such an acquisition rate is only representative of Regus ‘keeping pace’ with market growth.
He said: “Regus’ global acquisition spree has been building for a long time; and we see it as further evidence of the growing strength within our industry overall. What will be interesting to watch, will be those other ‘Super-Regional’ Serviced Office operators who are quietly doing the same.
“One other item to consider in all this; is that while Regus is gobbling up centres left and right, in order for them to merely grow by 10% they need to buy or build about 120 centres per year. Our industry overall is growing at about 15%; and many operators are growing much faster than that. So, in order of percentage growth magnitude, Regus is only keeping pace with the industry at large.”
MWB Business Exchange specialises in office space across The City and London’s West End, and boasts a total of 70 centres across the UK, compared to Regus’ global provision of 1,500 centres across 600 cities in 100 countries.