Almost two years after WeWork imploded ahead of its planned IPO, the office-sharing startup is finally going public.
Friday, WeWork announced a merger with special acquisition company BowX Acquisition Corp. The deal values WeWork at $ 9 billion, far from being ridiculously bloated $ 47 billion it was appreciated leading up to the failed IPO. WeWork, a real estate agency with a wild history that rents out co-working space to tech startups, chose to delay the 2019 IPO amid revelations of wild mismanagement and mounting debt. The company has registered between 2016 and 2019 about $ 4 billion in losses (Hey, with Kombucha on tap is not cheap, you know).
In the aftermath then WeWork co-founder and CEO Adam Neumann, who was scrutinized by investors following his payout more than $ 700 million in stock options shortly before the planned IPO, agreed to resign, thousands of employees lost their jobs, and the Securities and Exchange Commission started an investigation in the disaster.
But now the beleaguered startup says those days are behind it.
“WeWork has spent the past year transforming the business and refocusing its core while managing and innovating during a historic downturn,” wrote CEO Sandeep Mathrani. a blog post Friday. “As a result, WeWork has become the global leader in flexible space with a value proposition stronger than ever.”
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WeWork and BowX have been negotiating a possible merger since January, reports the Wall Street JournalUnder the deal, WeWork will receive approximately $ 1.3 billion, including $ 800 million in a private placement of Insight Partners and funds managed by, among others, Starwood Capital Group and Fidelity Management. The merger is expected to be completed in the coming months, WeWork said.
Like many companies, WeWork is struggling to stay afloat amid the covid-19 pandemic because, you know, it’s kind of hard to sell people on a physical coworking space when a deadly transmissible virus is circulating. The company did not pay rent for some of its locations in April following widespread lockdowns, Bloomberg reported at the time.
But with the world slowly reopening and companies that are now more than ever looking for flexible office space models, Bloomberg predicts this could be WeWork’s chance to shine. And the company’s higher educated agree.
“The pandemic has fundamentally changed the way we work and WeWork is incredibly well positioned to provide a springboard to a future powered by digital technology and a new appreciation for the value of flexible workspace,” said Executive Chairman Marcelo Claure in Friday’s blog post.