IWG offloads Taiwan assets in new franchise deal
International Workplace Group
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16:35 07/10/24
Serviced office and co-working space specialist IWG has entered into a second strategic partnership with TKP Corporation, it announced on Friday.
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The FTSE 250 company said under the agreement, it would divest its Taiwanese operations to TKP, with the two parties agreeing an exclusive master franchise agreement for the country.
It said the transaction followed the analogous deal, agreed between IWG and TKP in April, in respect of the divestment of IWG's Japanese operations to TKP and related franchise agreement for that market.
IWG said it and TKP had entered into a definitive sale and purchase agreement for the entire outstanding capital contributions of IWG's Taiwanese subsidiaries, which together consisted of 14 flexible co-work centres.
It said it would receive gross consideration of £22.7m, payable in cash at completion, subject to completion accounts adjustments for cash, debt and working capital.
Completion sas expected to occur in September, and was 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 two firms provided TKP with exclusive rights to the use of the ‘HQ’, ‘Regus’ and ‘SPACES’ brands in Taiwan, and would allow 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, TKP has committed to a development plan which would add “significantly” to IWG's centre network in Taiwan, and IWG - as master franchisor - had committed to provide on-going services and support to TKP 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 IWG board said in its statement.
The Taiwanese business contributed £6.8m to group revenue and generated EBITDA of £1.4m in 2018.
IWG said the total gross asset value of the divested business as at 31 December was £9.9m.
“Proceeds from the divestment will be used for the group's general corporate purposes,” the board added.