Regus unveils HQ acquisition

Office provider Regus is to buy US rival HQ Global for £163.5m (€244.8m), it announced today.

Regus, which came out of Chapter 11 bankruptcy protection in the United States last year, said the move would create annual savings of at least £11m (€16.5m) within 18 months of completion.

The Surrey, England-based group said it would raise around £119m (€178.2m) towards the acquisition by issuing new shares. The rest will be funded by debt.

Regus indicated last month that it was in talks to buy HQ Global, which operates a network of more than 200 centres across the US and counts Google and Washington Mutual among its major customers.

The acquisition, which is subject to shareholder approval, will not include the UK arm of HQ – owned by financier George Soros and property entrepreneur Peter Kershaw.

Regus said the deal would provide “significant scope” for savings through a reduction in overheads, economies of scale and operating efficiencies.

The combined US group will be managed from a single head office, although Regus said it was too early to say how many jobs would be lost. A spokesman said no business centres would be closed down.

Regus employs more than 2,000 staff worldwide and operates nearly 400 business centres across more than 50 countries.

Its value soared in the tech boom but rapid expansion in the US backfired because of falling rents and rising vacancy rates.

The company, whose customers include Microsoft, Boeing and Dell, went into Chapter 11 bankruptcy protection in the US in January 2003 as it sought to protect itself from creditors and give it time to reorganise.

The group strengthened its financial position after it raised £54.8m (€82m) through a fully-subscribed rights issue last December.

In its last financial year to December 31 it posted pre-tax losses of £29.2m (€43.7m) compared with a deficit of £119.1m (€178.4m) last time.