WeWork agrees $9 billion SPAC merger to finally get stock market listing

By Niket Nishant, Noor Zainab Hussain and Joshua Franklin (Reuters) - WeWork said on Friday it has agreed to go public through a merger with blank-check firm BowX Acquisition Corp, enabling the office-sharing company to complete a stock market listing two years after its failed first attempt. The merger with BowX, a special purpose acquisition company (SPAC), values WeWork at around $9 billion, 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. Later in 2019, WeWork attempted an initial public offering but pulled the plans due to investor concerns over its business model and co-founder Adam Neumann's management style.

Reuters March 27, 2021 00:07:03 IST
WeWork agrees $9 billion SPAC merger to finally get stock market listing

WeWork agrees 9 billion SPAC merger to finally get stock market listing

By Niket Nishant, Noor Zainab Hussain and Joshua Franklin

(Reuters) - WeWork said on Friday it has agreed to go public through a merger with blank-check firm BowX Acquisition Corp, enabling the office-sharing company to complete a stock market listing two years after its failed first attempt.

The merger with BowX, a special purpose acquisition company (SPAC), values WeWork at around $9 billion, 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.

Later in 2019, WeWork attempted an initial public offering but pulled the plans due to investor concerns over its business model and co-founder Adam Neumann's management style.

Neumann ultimately stepped down as chief executive. Sandeep Mathrani is now CEO, and his work has included cutting costs by $1.6 billion, according to WeWork.

"Sometimes you don't pick the path (and) a path picks you. In December, we were approached by BowX and other SPACS," Mathrani told CNBC in an interview.

"We had seen a path to profitability and we thought it was a good time to raise additional liquidity to de-risk the balance sheet, and to make sure that we have a path to profitability," Mathrani added.

BowX shares on Nasdaq were up 8% in morning trading.

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, according to a person familiar with the matter. Current shareholders will own about 83% of the combined company.

SPACs like BowX are shell companies that raise funds in an IPO with the goal of merging with an unidentified private company. For the company being acquired, the merger is an alternative way to go public over a traditional IPO.

'OPPORTUNITY STOCK'

Prospective investors in WeWork's 2019 IPO were in part spooked by losses that stretched into the billions of dollars with no clear path to profitability.

WeWork has yet to turn a profit. Its adjusted EBITDA, a measure of a business' underlying profitability, was -$1.8 billion in 2020. WeWork forecasts this will be -$900 million in 2021 but predicts it will achieve operating profitability of $500 million in 2022.

WeWork has also had to weather the COVID-19 pandemic, which led to many office staffers working from home. WeWork's revenues for 2020 were flat at $3.2 billion, but the company and real estate industry experts expect there will be growing demand after the pandemic for the sort of flexible offices provided by companies like WeWork.

"We believe that WeWork is going to be the opportunity stock for the recovery," BowX co-CEO Vivek Ranadivé told CNBC.

In total WeWork expects to raise $1.3 billion in cash from the merger, funded by the $420 million BowX raised in its IPO in August and an $800 billion private investment in public equity (PIPE) from investors including Insight Partners, Starwood Capital Group and Fidelity Management.

BowX had initially looked to raise $500 million for the PIPE but increased this due to investor demand, according to people familiar with the matter.

PJT Partners was WeWork's financial adviser on the deal. UBS Group AG advised BowX.

(Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Joshua Franklin in Boston; Additional reporting by Herb Lash in New York; Editing by Ramakrishnan M., Arun Koyyur, Saumyadeb Chakrabarty and Dan Grebler)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

Amazon union vote enters final stretch in watershed moment for U.S. labour
Business

Amazon union vote enters final stretch in watershed moment for U.S. labour

By Mike Spector and Jeffrey Dastin (Reuters) - The National Labor Relations Board has begun reviewing ballots from Amazon.com Inc's workers in Alabama, who have voted on whether to form a union, with momentum for future labour organizing at America's second-largest private employer hanging in the balance. Agents from the labour board began sifting through ballots sent to more than 5,800 workers at Amazon's Bessemer, Alabama-based warehouse at 10 a.m

Spotify buys Locker Room app's maker Betty Labs in live audio push
News & Analysis

Spotify buys Locker Room app's maker Betty Labs in live audio push

By Elizabeth Culliford NEW YORK (Reuters) - Spotify Inc said on Tuesday it has purchased Betty Labs, the company behind sports-focused social audio app Locker Room, to accelerate its move into live audio. New voice-based platforms, including invite-only social app Clubhouse, have seen rapid growth in recent months during the COVID-19 pandemic.

Oil falls as Suez Canal opens, dollar rallies; eyes on OPEC+ meeting
Business

Oil falls as Suez Canal opens, dollar rallies; eyes on OPEC+ meeting

By Devika Krishna Kumar NEW YORK (Reuters) - Oil prices slid on Tuesday as the Suez Canal reopened to traffic and the dollar rallied, while focus turned to an OPEC+ meeting this week, where analysts expect an extension to supply curbs to offset dim demand prospects. Brent crude fell $1.20, or 1.9%, at $63.78 a barrel by 1:12 p.m.