The SPAC merger will reportedly value the combined company at $ 9 billion, well below the $ 47 billion it had two years ago.
WeWork announced on Friday that it would merge with BowX Acquisition Corp, a Special Purpose Acquisition Company (SPAC) that will bring the competitive, collaborative startup to the public. The deal will give WeWork a $ 1.3 billion cash infusion and an enterprise value of $ 9 billion.
The deal comes more than a year after the company’s IPO, which led to the overthrow of Adam Neumann, its former CEO and founder.
“WeWork has spent the past year transforming the business and realigning its core while managing and innovating a historic downturn,” said Sandeep Mathrani, CEO of WeWork, in a statement. “As a result, WeWork has grown to become the world’s leading provider of flexible spaces with a value proposition that is stronger than ever.”
WeWork attempted to go public via the IPO in late 2019, but examining the S-1 filing and questions about the company’s reported valuation prompted the company to sink it. SoftBank’s final funding round in 2019 had reportedly valued the company at $ 47 billion, well below the company’s $ 9 billion allocated Friday.
The company’s now withdrawn S-1 filing for 2019 showed the company lost $ 1.9 billion and had $ 1.8 billion in revenue in 2018. A SPAC deal allows the company to avoid part of that pre-IPO review, though BowX Acquisition Corp will take a look at the company’s full financial picture.
After Neumann resigned in 2019, SoftBank took over the company. Masayoshi Son, CEO of SoftBank, said publicly that he regretted the investment after the failed IPO, which was estimated to cost SoftBank approximately $ 4.6 billion in shares.
Since that submerged IPO, the company has reported renewed focus on cost cutting, including an exit from 106 pre-opened or sub-par locations, as well as other various lease executions and deferrals, saving the company an estimated $ 4 billion in future payments. At the time of filing on Friday, WeWork had 851 locations in 152 cities.
The company’s 2020 global sales, excluding operations in China, were $ 3.2 billion, according to the press release announcing the transaction.
BowX Acquisition Corp is a subsidiary of Bow Capital, an investment company led by CEO Vivek Ranadivé.
“This company is focused on achieving profitability in the short term, but the added long-term opportunity for growth and innovation made WeWork a perfect fit for BowX,” Ranadivé said in a statement. “With a fantastic core business, I see WeWork as a company at a turning point, with an incredible number of key members, coupled with the vision and leadership to digitize an enormous industry.”
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