Sonder is the Latest to Join the SPAC Parade With a $2.2B Deal

Sonder Holdings and Gores Metropoulos II, a special purpose acquisition company (SPAC) sponsored by an affiliate of The Gores Group, LLC, have entered into a definitive agreement to combine.

The hospitality business is expected to have a pro forma enterprise value of $2.2 billion and over $700 million of net cash at closing. That $2.2 billion will represent 3.6 times Sonder’s projected 2022 revenue. Existing Sonder stockholders will retain 74% ownership in the pro forma company.

The business combination has been unanimously approved by GM II’s Board of Directors and Sonder’s Board of Directors. It is expected to close in the second half of 2021, subject to approval by GM II’s stockholders and other customary closing conditions.

Sonder, which launched in 2014, was co-founded by CEO Francis Davidson and Global Head of Real Estate Martin Picard. Following the closing of the proposed business combination, Davidson will continue to serve as CEO, and Sanjay Banker will continue to serve as President and CFO.

Sonder currently operates more than 300 properties across 35 markets in eight countries. The company leases spaces and rents them out on a nightly, weekly or monthly basis.

Sondar says the business combination will allow it to capitalize on opportunities within the growing $800-plus billion global lodging market. The company will continue investing in technology and expanding its footprint and product offerings.

Boosted by significant real estate supply growth, global travel market recovery and revenue enhancement initiatives, Sonder expects to achieve approximately $4 billion of revenue in 2025.

“We are incredibly excited about this transaction with Gores, which we view as a natural extension of our longstanding relationship that will enable us to accelerate our growth on the path to build the iconic 21st century brand in hospitality,” Davidson said in a prepared statement.

The $200 million PIPE investment is led by an affiliate of The Gores Group, with participation from Fidelity Management & Research Company, funds and accounts managed by BlackRock, Atreides Management entities affiliated with Moore Capital Management, Principal Global Investors and Senator Investment Group. The balance of the $450 million in cash is held in GM II’s trust account, in addition to $165 million raised as part of a March 2021 convertible notes offering led by Moore Strategic Ventures and approximately $200 million in PIPE proceeds, excluding transaction expenses, will be used to fund operations and support new and existing growth initiatives.

The commercial real estate industry has seen many SPACs over the past few months.

Most notable may be the merger between WeWork and APAC BowX Acquisition Corp. that would 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.