BY Fraser Tennant
In a transaction with an enterprise value of approximately $9bn, flexible space provider WeWork is to become a publicly listed company via a merger with special purpose acquisition company (SPAC) BowX Acquisition Corp.
Under the terms of the definitive merger agreement, WeWork will be provided with approximately $1.3bn of cash which will enable it to fund its growth plans into the future. The transaction will be funded with BowX’s $483m of cash in trust in addition to a fully committed $800m private placement investment at $10 per share.
Since 2019, WeWork has made significant progress on a strategic plan that included robust expense management efforts, exits of non-core businesses and material portfolio optimisation, which contributed to a dramatically improved cost structure.
“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn,” said Sandeep Mathrani, chief executive of WeWork. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”
Upon closing, it is expected that WeWork will have approximately $1.9bn of cash on the balance sheet and total liquidity of $2.4bn, even after exiting non-core businesses and despite significant headwinds from the coronavirus (COVID-19) pandemic.
“I am thrilled to partner with WeWork team as they continue to transform this business and the real estate industry at large,” said Vivek Ranadivé, chairman and co-chief executive of BowX. “With a fantastic core business, I see WeWork as a company at an inflection point, with an incredible roster of key members coupled with the vision and leadership to digitalise an enormous industry.”
Going forward, WeWork intends to expand beyond its core business through its On Demand, All Access and Platform offerings, enabling users to choose from their WeWork mobile app when, where, and how they work. Furthermore, demand from landlords and members remains strong, with a $4bn total sales pipeline and an estimated $1.5bn in committed 2021 revenue.
Marcelo Claure, executive chairman of WeWork, concluded: “WeWork is incredibly well positioned to springboard into a future propelled by digital technology and a new appreciation of the value of flexible workspace. We look forward to having BowX as our partner as we look to the next chapter.”
News: WeWork takes SPAC route to go public in $9 billion deal