WeWork, the US-headquartered workspace provider which counts telecommunications and internet group SoftBank as its largest investor, agreed a reverse takeover with special purpose acquisition company BowX Acquisition Corp on Friday.
The deal grants WeWork an initial enterprise value of about $9bn and it will acquire the place on secured by BowX through a $420m initial public offering on the Nasdaq Capital Market in August 2020.
Financial and investment group Fidelity Management & Research is joining Insight Partners, funds managed by Starwood Capital Group, Centaurus Capital and funds and accounts managed by BlackRock in an $800m private placement supporting the transaction.
Founded in 2010, WeWork runs a network of co-working spaces spanning 118 cities across the world. It failed in an attempt to go public in 2019 and required an extensive bailout from SoftBank to remain operational, but has since restructured and divested non-core holdings.
The company has a $4bn sales pipeline and has $1.5bn in committed revenue for 2021 despite the covid-19 pandemic, which it said has increased demand for flexible workspaces. SoftBank is providing a $550m senior secured notes facility, and it plans to expand its On Demand, All Access and Platform offerings.
SoftBank’s October 2019 rescue package consisted of a $3bn tender offer for fellow shareholders that included hotel operator Shanghai Jin Jiang International and conglomerate Legend Holdings, $5bn in debt financing and the acceleration of a $1.5bn funding commitment due April 2020.
WeWork had previously raised $11.5bn, $10.7bn of which had come from SoftBank or its Vision Fund, including a $2bn investment in January 2019 valuing it at $47bn, representing the company’s peak valuation.
Marcelo Claure, WeWork chairman and chief operating officer of SoftBank, said: “SoftBank has always seen the potential in WeWork’s core business to disrupt the commercial real estate industry and reimagine the workplace.
“Today, we take another step towards making that vision a reality. The pandemic has fundamentally changed the way we work, and WeWork is incredibly well positioned to springboard into a future propelled by digital technology and a new appreciation of the value of flexible workspace.”
Photo courtesy of WeWork Companies Inc.
