Nearly two years after WeWork imploded ahead of its planned initial public offering, the office-sharing startup is finally going public.
On Friday, WeWork announced a merger with special-purpose acquisition company BowX Acquisition Corp. The deal values WeWork at $US9 ($12) billion, a far cry from the ridiculously inflated $US47 ($62) billion it was valued at in the lead-up to its botched IPO. WeWork, a real estate firm with a wild history that leases co-working space to tech startups, opted to delay going public in 2019 amid revelations of wild mismanagement and mounting debts. Between 2016 and 2019, the company recorded some $US4 ($5) billion in losses (Hey, having Kombucha on tap ain’t cheap, you know).
In the aftermath, then WeWork co-founder and CEO Adam Neumann, who drew scrutiny from investors after cashing out over $US700 ($917) million in stock options shortly before the planned IPO, agreed to step down, thousands of employees lost their jobs, and the Securities and Exchange Commission launched an investigation into 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 simultaneously managing and innovating through a historic downturn,” CEO Sandeep Mathrani wrote in a blog post Friday. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”
WeWork and BowX have been negotiating a potential merger since January, the Wall Street Journal reports. Per the deal, WeWork will receive roughly $US1.3 ($2) billion, including $US800 ($1,048) million in a private placement investment from Insight Partners as well as funds managed by Starwood Capital Group and Fidelity Management, among others. The merger is expected to close within the coming months, WeWork said.
Like many businesses, WeWork has struggled to stay afloat amid the covid-19 pandemic since, you know, it’s kind of hard to sell people on a physical coworking space when there’s a deadly communicable virus going around. The company failed to pay rent for some of its locations back in April following widespread lockdowns, Bloomberg reported at the time.
However, with the world slowly opening back up again and companies on the hunt for flexible office space models now more than ever, Bloomberg predicts that this could be WeWork’s chance to shine. And the company’s higher-ups agree.
“The pandemic has fundamentally changed the way we work, and WeWork is incredibly well positioned to springboard into a future propelled by digital technology and a new appreciation of the value of flexible workspace,” said executive chairman Marcelo Claure in Friday’s blog post.