WeWork to Become Public Company in $9B SPAC Merger
The flex provider will receive $1.3 billion in cash as part of the transaction.
WeWork and special acquisition company BowX Acquisition Corp., have agreed to merge in a transaction that will take WeWork public and value the flex office provider at $9 billion.
The transaction will provide WeWork with approximately $1.3 billion in cash to fund its growth plans into the future.
It is a heady comeback for the company, following its failed IPO in 2019 and more recently, a year of struggle during the pandemic. But the company also took the opportunity of the last twelve months to refocus its core, according to CEO Sandeep Mathrani. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”
Over the course of 2020, WeWork 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% from its peak in September 2019. It also executed over 100 lease amendments for rent reductions, deferrals, or tenant improvement allowances resulting in an estimated $4 billion reduction in future lease payments.
Today the company has 851 locations in 152 cities, totaling more than one million workstations. Enterprise companies now make up more than 50% of WeWork’s memberships, up from just 10% in 2015. Only 10% of WeWork’s members have month-to-month commitments, while more than 50% have commitments longer than 12 months.
Going forward, WeWork intends to expand beyond its core business through its On Demand, All Access, and Platform offerings. The company maintains that demand from landlords and members remains strong, and it has a $4 billion total sales pipeline and an estimated $1.5 billion in committed 2021 revenue.
Marcelo Claure and Mathrani will continue to lead WeWork as executive chairman and CEO, respectively, along with the rest of the company’s leadership team. Following the closing, Vivek Ranadivé of BowX and Deven Parekh of Insight Partners will join the company’s Board of Directors.