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IWG PLC   -  IWG   

Strategic Partnership Transaction in Taiwan

Released 07:00 09-Aug-2019

RNS Number : 5274I
IWG PLC
09 August 2019
 

Not for release, publication or distribution, in whole or in part, in or into any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdictions.

 

This announcement contains inside information in relation to IWG plc

 

9 August 2019 

 

IWG plc ("IWG" or the "Group")

 

 Strategic Partnership Transaction in Taiwan

 

IWG, the global operator of leading co-work and workspace brands, is pleased to announce that it has entered into a second strategic partnership with TKP Corporation ("TKP"). IWG will divest its Taiwanese operations to TKP and the parties have agreed an exclusive master franchise agreement for the country (the "Transaction"). The Transaction follows the analogous deal, agreed between IWG and TKP in April 2019, in respect of the divestment of IWG's Japanese operations to TKP and related franchise agreement in respect of the Japan market.

 

IWG and TKP have entered into a definitive sale and purchase agreement for the entire outstanding capital contributions of IWG's Taiwanese subsidiaries, which together, consist of 14 flexible co-work centres. IWG will receive gross consideration of £22.7 million payable in cash at completion, subject to completion accounts adjustments for cash, debt and working capital. Completion is expected to occur in September 2019 and is conditional only on the approval of the Transaction by the Taiwanese Investment Commission of the Ministry of Economic Affairs. 

 

The long term master franchise agreement entered into by the parties provides TKP with exclusive rights to the use of the HQ, Regus and SPACES brands in Taiwan, and allows TKP to continue to operate the Taiwanese centres under IWG's brands and operating platform. As with the Japanese partnership signed earlier this year, under the Taiwanese agreement: (i) TKP has committed to a development plan which will add significantly to IWG's centre network in Taiwan, and (ii) IWG (as master franchisor) has committed to provide on-going services and support to TKP (as master franchisee) in return for an on-going platform fee linked to system-wide revenues in Taiwan.

 

The Transaction further demonstrates the strong momentum in IWG's franchising strategy and the interest from third parties wanting to operate IWG brands across a wide range of geographies, which will enable the company to grow more rapidly in this exciting market. 

 

The Taiwanese business contributed £6.8 million to Group revenue and generated EBITDA of £1.4 million in 2018. The total gross asset value of the divested business as at 31 December 2018 was £9.9 million.

 

Proceeds from the divestment will be used for the Group's general corporate purposes.

 

The Transaction, when aggregated with IWG's disposal of its Japanese operations agreed in April 2019 and announced on 15 April 2019, is to be treated as a class 2 transaction for the purposes of the UK Financial Conduct Authority's Listing Rules. 

 

The person responsible for arranging the release of this announcement on behalf of IWG is Tim Regan, Company Secretary.

 

Enquiries:

 

IWG plc

Tim Regan, Company Secretary
Wayne Gerry, Group Investor Relations Director

 

+41 (0)41 723 2353

Brunswick Group LLP

Nick Cosgrove

Oli Sherwood

+44 (0)20 7404 5959

 

 

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Strategic Partnership Transaction in Taiwan - RNS