WeWork has agreed to merge with a special-purpose acquisition company in a deal that would take the shared-office provider public nearly two years after its high-profile failure to launch a traditional IPO.
The planned merger with the BowX Acquisition Corp. SPAC values WeWork at $9 billion including debt, the companies announced Friday, confirming an earlier Wall Street Journal report. As part of the deal, WeWork would raise $1.3 billion, including $800 million in what is called a private investment in public equity, or PIPE, from Insight Partners, funds managed by Starwood Capital Group, Fidelity Management and others.
In January, the Journal reported that WeWork was in talks to combine with BowX.
WeWork is a big player in the market for flexible office space. It signs long-term leases with landlords, then after renovating a space and furnishing it, subleases small offices or even whole buildings to tenants for as little as a month at a time. Should the merger close in the coming months as expected, it would cap what has been a long and bumpy road toward a listing for WeWork.
The company is taking advantage of a torrent of new SPACs to accomplish what it failed to pull off in 2019, when public investors rejected the money-losing company and its visionary yet erratic leader, Adam Neumann, who subsequently resigned as chairman and CEO. Further hit by the coronavirus pandemic, which has emptied offices throughout the country, WeWork has closed locations, renegotiated leases and cut thousands of jobs in a bid to slash expenses.
A $9 billion valuation is a far cry from the $47 billion that WeWork was valued at in a private round of financing from SoftBank Group Corp. earlier in 2019. The Japanese technology investor was later forced to rescue WeWork and now holds a majority stake.
Bow Capital Management, the SPAC’s sponsor, is run by Vivek Ranadivé, owner of the NBA’s Sacramento Kings and founder of Tibco Software Inc. The venture firm lists basketball great Shaquille O’Neal as an adviser.
The SPAC raised $420 million last year as an empty shell and then set out to find a business to combine with, as the vehicles do. Its shares rose 3.7% to $10.10 in premarket trading following announcement of the deal.
Mr. Ranadivé and Deven Parekh of Insight Partners are to join WeWork’s board.