Real Estate

After Failing To Go Public In 2019, WeWork Set To Try Again Via SPAC

The SPAC merger will reportedly value the combined company at $9 billion, far below the $47 billion it was valued at two years ago.

WeWork announced Friday it was set to merge with BowX Acquisition Corp, a special purpose acquisition company (SPAC) that will take the embattled co-working startup public. The deal will give WeWork an infusion of $1.3 billion in cash and pegs it at an enterprise value of $9 billion.

WeWork CEO Sandeep Mathrani| Photo credit: Tony Favarula/Andrew Collings Photography

The deal comes more than a year after the company’s scuttled initial public offering, which led to the ouster of Adam Neumann, its former CEO and the company’s founder.

“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn,” Sandeep Mathrani, WeWork’s CEO, said in a statement. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”

WeWork attempted to go public via IPO in late 2019, but scrutiny over its S-1 filing and questions about the company’s reported valuation caused the company to scuttle it. SoftBank’s last funding round in 2019 had reportedly valued the company at $47 billion, far below the $9 billion enterprise value assigned Friday.

The company’s now-pulled 2019 S-1 filing showed the company lost $1.9 billion in 2018, while posting revenue of $1.8 billion. A SPAC deal allows the company to avoid some of that pre-IPO scrutiny, although BowX Acquisition Corp will get a look at the company’s full financial picture.

In the wake of Neumann’s resignation in 2019, SoftBank took over the company. SoftBank CEO Masayoshi Son said publicly he regretted the investment in the wake of the failed IPO, which he estimated cost SoftBank approximately $4.6 billion in stock value.

Since that scuttled IPO, the company reported a renewed focus on cutting costs, which has included an exit from 106 pre-open or underperforming locations, as well as other various lease executions and deferrals, saving the company an estimated $4 billion in future payments. As of Friday’s filing, WeWork had 851 locations in 152 cities.

The company’s 2020 global revenue, excluding operations in China, was $3.2 billion, according to the release announcing the transaction.

BowX Acquisition Corp is a subsidiary of Bow Capital, a capital investment firm run by CEO Vivek Ranadivé.

“This company is primed to achieve profitability in the short-term, but the added long-term opportunity for growth and innovation is what made WeWork a perfect fit for BowX,” Ranadivé said in a statement. “With a fantastic core business, I see WeWork as a company at an inflection point, with an incredible roster of key members coupled with the vision and leadership to digitize an enormous industry.”

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