- GeneralSPAC
- March 27, 2021
- 4 minutes read
Official: WeWork To Go Public With $9B SPAC Deal
Pertaining true to recent rumors, SoftBank-owned office leasing company WeWork has sealed a deal to become publicly-traded through a merger…
Pertaining true to recent rumors, SoftBank-owned office leasing company WeWork has sealed a deal to become publicly-traded through a merger with a special-purpose acquisition company (SPAC). It’s announced that it’s merging with BowX Acquisition Corp in a deal valuing it at $9 billion.
BowX Acquisition Corp is a SPAC sponsored by investment firm Bow Capital Management and is advised by retired basketball star Shaquille O’Neal. It raised $420 million from its IPO in August last year.
With its merger, WeWork is getting $483 million of cash held in trust by BowX plus an extra $800 million PIPE round committed by investors including Fidelity, BlackRock, Starwood Capital Group, and Insight Partners. Totally, it’ll get $1.3 billion of cash proceeds from its merger.
- WeWork’s past has definitely not been forgotten, being the poster child for excessive startup exuberance under the leadership of its former CEO Adam Neumann who was then ousted by the company’s board led by its biggest shareholder SoftBank. SoftBank then took over the company and installed a new management team to cut costs and make amends.
- Under new leadership, WeWork has moved to trim much fat and focus on its core business of office leasing, in contrast to the time under Neumann when it had many loss-making side businesses. As it stabilized, the company reports making $3.2 billion in revenue, excluding China, in 2020, flat compared to 2019 but despite a Covid-19 pandemic that had great negative effects on the use of short-term office space.
- WeWork said it has a $4 billion total sales pipeline and $1.5 billion in committed 2021 revenue. After its SPAC deal is completed, it’s expected that the company will have $1.9 billion of cash to bolster its business. It’s also gotten commitments of a $550 million loan facility to be provided by its controlling shareholder SoftBank Group.
- Surely, WeWork is on a secured path to the public markets again after a previous failed attempt at an IPO. But then, a $9 billion valuation is much smaller than the near-$50 billion valuation the company sought for an IPO in its heyday.
