SoftBank-Backed WeWork To Go Public Via SPAC Merger In $9B Deal

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

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.

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.

Related content: Benzinga's Full SPAC Calendar

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

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

BowX Acquisition sponsor Bow Capital Management was run by NBA’s Sacramento Kings owner and Tibco Software Inc founder of 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 into the future. 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 share prices traded higher by 2.31% at $9.96 in the premarket session on the last check Friday. SFTBY shares closed lower by 2.6% at $41.54 on Thursday.

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