More than a year after WeWork withdrew its IPO, the flexible workspace company looks set to go public following a multibillion-dollar deal with BowX Acquisition, a special purpose acquisition company (SPAC).
The office space provider has agreed to merge with the SPAC in a deal that values WeWork at approximately $9bn including debt and provides it with a cash injection of $1.3bn.
A SPAC is a blank-cheque shell company that raises money from investors and is listed on a stock exchange. The SPAC then merges with an established company and takes it public – in this case WeWork. This is an approach that has exploded in popularity over the last year as a way to take companies public as it can be quicker than the traditional IPO route.
For WeWork, the road to becoming a publicly traded company has been a rocky one. It first announced its plans for an IPO in April 2019, but later that year there were reports of delays and valuation issues. SoftBank, one of the company’s biggest backers, also asked WeWork to shelve its IPO dreams.
By October 2019, after a protracted period of public scrutiny and questions about the company’s leadership, the IPO plans were well and truly ended and SoftBank took over 80pc of the company in a bailout deal. The dramatic twists and turns saw WeWork’s value drop from $47bn to an estimated $7.5bn, although its former CEO, Adam Neumann, still walked away from the deal as a billionaire.
Since 2019, WeWork said that it has made progress towards transforming its business through a strategic plan that included expense management efforts, exits of non-core businesses and portfolio optimisation.
The $1.3bn cash injection from the BowX Acquisition deal includes $800m from investors including Starwood Capital and Fidelity Management and Research Company.
Vivek Ranadivé, chair and co-CEO of BowX Acquisition, said WeWork is at “an inflection point” and has a fantastic core business.
“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,” he said.
The transaction, which has been approved by the boards of WeWork and BowX, is expected to close by the third quarter of 2021.
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