WeWork has agreed to go public through a merger with blank cheque firm BowX Acquisition, in a deal that values it at $9 billion, the office-sharing start-up said on Friday.
It marks a steep drop from the $47bn that WeWork was valued for a listing in 2019, ahead of a botched listing plan that imploded because of investor concerns over its business model and its founder Adam Neumann's management style.
Back then, Goldman Sachs bankers said the valuation could hit as much as $65bn, but instead it plummeted to roughly $8bn after SoftBank Group was forced to extend a financing lifeline to WeWork.
The start-up told prospective investors it lost about $3.2bn last year as part of a pitch for a stock market listing by merging with a special purpose acquisition company (SPAC), sources told Reuters earlier this week.
WeWork will fetch $1.3bn in cash from the latest deal, including $800 million in private investment from Insight Partners, funds managed by Starwood Capital Group, Fidelity Management and others, The Wall Street Journal reported.
A SPAC is a shell firm that uses proceeds from a public listing to buy a private firm and WeWork is the latest in a slew of high-profile companies that have taken this route to the markets.
Tesla’s rival Lucid Motors and Richard Branson-led Virgin Galactic Holdings too have chosen SPAC mergers over traditional initial public offerings.
South-East Asia's ride-hailing and food delivery giant Grab Holdings is in talks to go public in the US through a mega-merger that would value it at $40bn, Reuters reported this month.
BowX Acquisition raised $420m in its IPO in August last year.