IWG PLC (LON:IWG), the global operator of leading co-work and workspace brands, today announced that it has entered into a second strategic partnership with TKP Corporation. IWG will divest its Taiwanese operations to TKP and the parties have agreed an exclusive master franchise agreement for the country. 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.