Friday 26 March 2021 11:08 am

Wework to go public via Spac in $9bn deal

Wework has reportedly agreed to go public through a merger with a blank-cheque vehicle valuing the company at $9bn. 

The office-sharing giant is the latest company to join the Spac phenomenon which has been positioned as a quicker way to go public. 

Also known as blank cheque vehicles, Spacs raise capital through a public listing with the purpose of acquiring an existing company. 

The Wall Street Journal reported Wework is set to merge with BowX Acquisition Corp and will also raise $1.3bn including $800m in a so-called Pipe deal – private investment in public equity – from Insight Partners among others. 

It has been a bumpy ride towards a listing for Wework. Its plans to float imploded in October 2019 as investors grew concerned about Wework’s business model and founder Adam Neumann’s management style. 

Since then Wework has been beset by issues which have only been exacerbated by the dramatic shift to remote working in the pandemic. Wework signs long-term leases with landlords before subletting small offices, or whole buildings, to tenants. 

In January it said it had sufficient liquidity to mitigate the pandemic but warned the timing of the recovery and impact of further lockdowns were concerns. 

Earlier this week the company disclosed to prospective investors it had lost about $3.2bn last year as part of its Spac pitch, according to Reuters. 

“Wework has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn,” chief executive Sandeep Mathrani said.

“Wework has emerged as the global leader in flexible space with a value proposition that is stronger than ever. Having Vivek and the BowX team will be invaluable to WeWork as we continue to define the future of work.”

The Financial Times reported the company forecasts occupancy to rebound to 90 per cent from 2022 from 47 per cent at the end of last year. Wework expects adjusted Ebitda of $485m next year.