WeWork to go public through $9 billion merger with BowX Acquisition Corp
30 March 2021
WeWork, the leading flexible space provider, and BowX Acquisition Corp (BowX), a special purpose acquisition company, have entered into a definitive merger agreement that will result in WeWork becoming a publicly listed company.
The transaction values WeWork at an initial enterprise value of approximately $9 billion. The transaction will provide WeWork with approximately $1.3 billion of cash which will enable the company to fund its growth plans in the future.
The valuation marks a steep drop from the $47 billion the money-losing company was worth in a 2019 private funding round led by Japanese conglomerate SoftBank Group Corp.
SoftBank, WeWork’s largest backer, will retain a majority stake in the company after the deal. SoftBank and other investors have agreed to a one-year lock-up on their shares, reports citing sources familiar with the matter said. Existing shareholders will own about 83 per cent of the combined company.
“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn. As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever. Having Vivek and the BowX team will be invaluable to WeWork as we continue to define the future of work,” Sandeep Mathrani, CEO of WeWork, said.
“I’m thrilled to partner with Sandeep, Marcelo and the entire WeWork team as they continue to transform this business and the real estate industry at large. 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. 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 digitise an enormous industry,” Vivek Ranadivé, chairman and Co-CEO of BowX Acquisition Corp, said.
“SoftBank has always seen the potential in WeWork’s core business to disrupt the commercial real estate industry and reimagine the workplace. Today, we take another step towards making that vision a reality. The pandemic has fundamentally changed the way we work, and WeWork is incredibly well positioned to springboard into a future propelled by digital technology and a new appreciation of the value of flexible workspace. We look forward to having BowX as our partner as we look to the next chapter,” Marcelo Claure, executive chairman of WeWork, said.
Marcelo Claure and Sandeep Mathrani will continue to lead WeWork as Executive Chairman and Chief Executive Officer, respectively, along with the rest of the company’s highly experienced leadership team. Following the closing, Vivek Ranadivé of BowX and Deven Parekh of Insight Partners will join the company’s board of directors.
The merger with blank-check firm BowX Acquisition Corp will enable the office-sharing company to complete a stock market listing two years after its failed first attempt. In 2019, WeWork attempted an initial public offer but pulled the plans due to investor concerns over its business model and co-founder Adam Neumann’s management style.