WeWork to Go Public Via SPAC Merger in $9B Deal

The office-sharing startup is capitalizing on the SPAC boom following investor rejection of the IPO due to its losses.
Lauren MuskettMarch 26, 2021

SoftBank-backed shared office provider WeWork has decided to go public via special-purpose acquisition company (SPAC) merger with BowX Acquisition, almost two years after its failed traditional initial public offering.

What Happened: WeWork inks long-term leases with landlords. The company then subleases small offices or even whole buildings to tenants for low as a month after renovating and furnishing the space.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

The merger would value WeWork at $9 billion including debt, the Wall Street Journal reports. WeWork would also raise $1.3 billion, including $800 million in private investment in public equity from Insight Partners, funds managed by Starwood Capital Group, Fidelity Management, and others.

WSJ had reported WeWork’s talks to combine with BowX in January.

Why It Matters: WeWork is capitalizing on the SPAC boom following investor rejection of a traditional IPO due to the company’s losses. WeWork’s IPO failure was followed by the resignation of CEO and Chairman Adam Neumann. The subsequent pandemic wreaked havoc on the business.

A $9 billion valuation negligible compared with SoftBank’s $47 billion valuation in a private round of financing in 2019. Softbank was later forced to rescue WeWork and holds a majority stake at present.

BowX Acquisition sponsor Bow Capital Management was run by NBA’s Sacramento Kings owner and Tibco Software founder Vivek Ranadivé. The SPAC raised $420 million last year before forging a merger agreement for public listing.

Ranadivé and Deven Parekh of Insight Partners are slated to join WeWork’s board.

The transaction will provide WeWork with approximately $1.3 billion of cash, enabling the company to fund its growth plans. It is expected that WeWork will have roughly $1.9 billion of cash on the balance sheet and total liquidity of $2.4 billion, including a $550 million senior secured notes facility to be provided by SoftBank Group.

Price action: BowX Acquisition’s share price traded higher by 2.31% at $9.96 in the premarket session on the last check Friday. SoftBank shares closed lower by 2.6% at $41.54 on Thursday.

This story originally appeared on Benzinga. © 2021 Benzinga.com.

Benzinga does not provide investment advice. All rights reserved.