WeWork to go public in $9 bn merger with BowX

WeWork has agreed to merge with Indian-American Vivek Ranadive-led blank-check firm BowX Acquisition Corp., resulting in the co-sharing workspace company becoming a publicly listed company.
WeWork IPO
The transaction values WeWork at an initial enterprise value of approximately $9 billion, WeWork said on Friday.

The move comes after WeWork’s failed attempt to go public in 2019 and fall in its valuation.

Following the setback, Japan-based technology investor SoftBank took 80 percent ownership of the company and infused into it $5 billion in new financing.

The transaction will provide WeWork with approximately $1.3 billion of cash which will enable the company to fund its growth plans into the future.

“SoftBank has 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,” said Marcelo Claure, SoftBank CEO and executive chairman of WeWork.

Since 2019, WeWork has made progress towards transforming its business through a strategic plan that included expense management efforts, exit of non-core businesses, and material portfolio optimization, which contributed to improvement in cost structure.

Over the course of 2020, WeWork said it improved its free cash flow by $1.6 billion through cost cutting measures including reducing SG&A expenses by $1.1 billion and trimming building operating expenses by $400 million.

The company also exited all of its non-core ventures and streamlined headcount by 67 percent from its peak in September 2019.

The company’s 2020 revenue, excluding China, was $3.2 billion, which is flat compared to 2019, even after exiting non-core businesses and despite significant headwinds from Covid-19.

WeWork aims 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.

WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn, Sandeep Mathrani, CEO of WeWork, said in a statement.