WeWork announced its IPO plan through a merger with a SPAC on Friday. By merging with the blank-check firm BowX Acquisition Corp, the office-sharing company will finally go public after failing to do so two years ago.
WeWork, BowX, and the IPO
BowX values WeWork at around $9 billion. Quite the steep drop from 2019, when WeWork was valued at $47 billion in a private funding round led by Softbank Group Corp.
In the same year, WeWork also planned on going public. Though, the company ended up cancelling the plan. Investors’ concerns over the company’s business model and co-founder Adan Neumann’s management plan became some of the considerations to cancel the plan, Reuters reports.
Neumann soon resigned as the chief executive and Sandeep Matharani took over the position. According to WeWork, the company managed to cut cost by $1.6 billion through Mathrani’s lead. Soon after, WeWork received an offer by BowX and other SPACs for an IPO.
Through an interview with CNBC, Mathrani revealed, “Sometimes you don’t pick the path (and) a path picks you. In December, we were approached by BowX and other SPACS”.
“We had seen a path to profitability and we thought it was a good time to raise additional liquidity to de-risk the balance sheet, and to make sure that we have a path to profitability,” Mathrani continued.
Following the news, BowX recorded an 8% rise on Nasdaq during morning trading.
Accordingly, the deal will allow Softbank as WeWork’s largest backer to retain a majority stake in the company. An insider told Reuters that Softbank and other investors have compromised to a one-year lock-up on their shares. Thus, current shareholders will own roughly 83% shares of both companies combined.
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