WeWork Will Go Public in a Merger With a SPAC

Following an unsuccessful initial public offering in 2019 and its close to business, WeWork said on Friday that it had agreed to a deal that would take the company co-working in the stock market.

Instead of the traditional IPO, WeWork is merging with BowX Acquisition, a special-purpose acquisition company, a type of deal that has become extremely popular in recent months.

BowX is an investment firm backed by Bau Capital, which counts National Basketball Association star Shakeel O’Neill as an advisor.

WeWork leases office space and then effectively assigns it to its members, which include individuals, start-ups, and large corporations. Its major expansion was fueled by SoftBank, the Japanese conglomerate that became WeWork’s largest shareholder and saved the company in 2019 as it was about to run out of cash.

WeWork said the deal with BowX gave it an equity value of $ 7.9 billion, which is much lower than this Valued at approximately $ 50 billion Its investors were placed on the company in 2019. WeWork will receive $ 1.3 billion in cash from the deal, including $ 800 million from Insight Partners, Starwood Capital Group, BlackRock and other investors.

The epidemic left WeWork’s offices vacant, and it is unclear how much demand there will be for its office space in the future. Many people have gotten used to working from home and some big employers such as Target and Dropbox have said they plan to leave a large part of their office because they expect fewer employees to come in daily. Other businesses, such as retailer REI, sold their headquarters together. WeWork said on Friday that from 619,000 in 2019, membership fell to 476,000 last year.

Nevertheless, Box’s chief executive, Vivek Ranadive, told CNBC in an interview on Friday that the epidemic would be a “tailwind” for the office-sharing company.

“Companies have now decided that flex space is a must,” says Mr. Ranadive, a technology entrepreneur who owns the Sacramento Kings basketball team. “Maybe they want to own that place for their own headquarters. But for everything else, they want to hand it over to a werk. “

WeWork said its cost had come down since its unsuccessful public offering. The company expects revenue to grow in the coming years. It offered a consistent forecast of earnings before interest, taxes, depreciation and amortization, an often flatter measurement of cash flow, but did not reveal what its benefits could be. In the past, it has struggled to meet lofty projections. And one should try to attract tenants at a time when office markets in New York, London, San Francisco and other big cities are waking up with cheap sublet space.

Sandeep Matharani, chief executive of WeWork, said on Friday, “We looked at our plan, we saw what we accomplished in 2020 – and we saw a path to profitability – and we thought it was a good time to raise additional liquidity . ” .

A company presentation released on Friday stated that WeWork lost about $ 3.8 billion in 2019 last year. The 2020 loss included a write-off of $ 1.4 billion of intangible assets. Last year, WeWork’s operations consumed $ 757 million in cash, up from $ 448 million in 2019.

Last month, the way for a deal was cleared Adam newman, Co-founder of WeWork and SoftBank settled the legal dispute. WeWork was Closed its IPO in 2019 Investors then repaid its losses and criticized its governance practices.

Softbank WeWork has been eager to take the public through a special-purpose acquisition company, or SPAC, a route to Wall Street that has become increasingly popular in recent months as it accelerates from a traditional public offering. As of Wednesday, 2921 SPACs had gone public in 2021, raising $ 93 billion and breaking the previous year’s record in just a few months.

Softbank injects billions of dollars into WeWork after Softbank CEO, Masayoshi Son Mr. Newman’s ambitious vision, Which included building school and servicing apartments in addition to renting office space. In total, SoftBank has paid WeWork approximately $ 16 billion, counting investments in the company, debt and payments to existing shareholders. After WeWork goes public, SoftBank will be able to sell its stake or expect it to go up in value.

Source link

Leave a Comment