WeWork is finally going public, after the flexible office space company announced Friday a merger with special-purpose acquisition company BowX Acquisition Corp. in a deal valuing WeWork at $9 billion.
Under terms of the deal, WeWork will receive about $1.3 billion, including $800 million in a so-called PIPE (private investment in public equity) with investors including Insight Partners, funds managed by Starwood Capital, Fidelity Management & Research Co., Centaurus Capital and funds managed by BlackRock. /zigman2/quotes/207946232/composite BLK -1.56%
Shares of BowX /zigman2/quotes/222085303/composite BOWX -0.67% , which went public in October, jumped 9.9% in afternoon trading. It has rallied 4.2% year to date, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.87% has gained 4.7%.
The deal comes nearly two years after WeWork officially postponed plans for a more traditional initial public offering , amid large losses, a heavy debt load and concerns surrounding Chief Executive Adam Neumann that eventually led to his ouster .
The valuation from the deal with BowX compares with a $47 billion valuation WeWork had in the run-up to its plans for an IPO in 2019.
Chief Executive Sandeep Mathrani said WeWork has changed since those days, through a strategic plan to cut expenses, optimize its portfolio and exit non-core businesses.
“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn,” Mathrani said. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”
After the closing of the merger, which is expected to occur by the third quarter of 2021, the combined company is expected to have about $1.9 billion of cash on its balance sheet and total liquidity of $2.4 billion, including a $550 million in senior secured notes provided by Japan-based SoftBank Group.
SoftBank representatives will comprise a minority of the nine board seats following the deal’s close.