WeWork has agreed to go public through a merger with blank-check firm BowX Acquisition Corp, in a deal that values it at $9 billion, the office-sharing startup said on Friday.
It marks a steep drop from the $47 billion that WeWork was valued for a listing in 2019, ahead of a botched listing plan that imploded due to investor concerns over its business model and its founder Adam Neumann’s management style.
Back then Goldman Sachs bankers had said the valuation could hit as much as $65 billion, but instead it plummeted to roughly $8 billion after SoftBank Group Corp was forced to extend a life-saving financing lifeline to WeWork.
The startup told prospective investors it lost about $3.2 billion last year as part of a pitch for a stock market listing by merging with a special purpose acquisition company (SPAC), sources told Reuters earlier this week.
WeWork will fetch $1.3 billion in cash from the latest deal, including $800 million in private investment from Insight Partners, funds managed by Starwood Capital Group, Fidelity Management and others, the Journal reported.
A SPAC is a shell firm that uses proceeds from a public listing to buy a private firm and WeWork is the latest in a slew of high-profile companies that have taken this route to the markets.
Tesla Inc’s rival Lucid Motors and Richard Branson-led Virgin Galactic Holdings Inc too have chosen SPAC mergers over traditional IPOs.
Southeast Asia’s ride-hailing and food delivery giant Grab Holdings is in talks to go public in the United States through a mega-merger that would value it at $40 billion, Reuters reported earlier this month.
BowX Acquisition raised $420 million in its IPO in August last year.