The merger with BowX Acquisition Corp. would value the embattled flexible-office company at $9 billion including debt — a fraction of its $47 billion valuation in 2019.
WeWork will get $1.3 billion in proceeds from the SPAC deal, including $800 million from a PIPE, or private investment in a public entity, according to the Wall Street Journal. PIPE investors reportedly include Insight Partners, funds managed by Starwood Capital Group, Fidelity Management and others.
The deal caps what’s been a long and arduous road over for the company, which failed to go public in 2019 after investors balked at its eye-popping losses and erratic behavior by co-founder Adam Neumann. Since Neumann’s ouster, CEO Sandeep Mathrani has worked to slash expenses through layoffs and by closing underperforming locations.
In January, the Journal reported that WeWork was in talks with at least two SPACs. It was also reportedly considering additional private investment.
Bow Capital is run by Vivek Ranadivé, a software executive and owner of the Sacramento Kings and founder of Tibco Software Inc. Basketball legend Shaquille O’Neal is an adviser.
WeWork lost $3.2 billion last year when the pandemic obliterated demand for office space, according to the Financial Times. Occupancy reportedly fell to 47 percent in 2020, down from 72 percent at the beginning of the year. Overall, WeWork reduced capital expenses to $49 million from $2.2 billion.
[WSJ] — E.B. Solomont