Almost two years after WeWork imploded before its planned initial public offering, the office-sharing startup is finally going public.
On Friday, WeWork announced a merger with the special purpose acquisition company BowX Acquisition Corp. The deal values WeWork at $ 9 billion, a far cry from the ridiculously inflated $ 47 billion it was valued in the period leading up to its unsuccessful IPO. WeWork, a real estate company with a wild story who rents shared workspace to technology startups, opted to postpone the IPO in 2019 amid revelations of mismanagement and growing debts. Between 2016 and 2019, the company registered about $ 4 billion in losses (Hey, having Kombucha on tap it ‘s not cheap, you know).
In the aftermath, then WeWork co-founder and CEO Adam Neumann, who attracted investor scrutiny after withdrawing over $ 700 million in stock options just before the planned IPO, agreed to resign, thousands of employees lost their jobs, and the Securities and Exchange Commission launched an investigation for disaster.
But now the beleaguered startup says those days are behind us.
“WeWork spent the past year transforming the business and reorienting its core, while simultaneously managing and innovating through a historic crisis,” wrote CEO Sandeep Mathrani in a blog post Friday. “As a result, WeWork has emerged as a global leader in flexible space with a stronger value proposition than ever.”
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WeWork and BowX have been negotiating a possible merger since January, the Wall Street Journal reports. Under the agreement, WeWork will receive approximately US $ 1.3 billion, including US $ 800 million in a private placement investment Insight Partners, as well as funds managed by Starwood Capital Group and Fidelity Management, among others. The merger is expected to be completed in the coming months, WeWork said.
Like many companies, WeWork has been struggling to stay afloat amid the covid-19 pandemic, since, you know, it’s kind of hard to sell people in a physical coworking space when there’s a deadly communicable virus circulating. The company stopped paying rent for some of its locations in April, after widespread blockades, Bloomberg reported at the time.
However, with the world slowly opening up again and businesses looking for flexible office space models now more than ever, Bloomberg predicts that this could be WeWork’s chance to shine. And the heads of the company agree.
“The pandemic has fundamentally changed the way we work, and WeWork is incredibly well positioned to step into a future driven by digital technology and a new appreciation of the value of the flexible workspace,” said Executive President Marcelo Claure in Friday’s post fair on the blog.