NEW YORK– (Realty News Report) – WeWork, the flexible co‑working space operator, has agreed to merge with BowX Acquisition Corp., a special purpose acquisition company (SPAC).
Under the agreement, WeWork will become a publicly traded company. The transaction values WeWork at an initial enterprise value of approximately $9 billion and will provide the company with roughly $1.3 billion in cash to support its future growth plans.
WeWork previously attempted a public offering a few years ago, but that effort was unsuccessful.
Following the COVID‑19 pandemic, WeWork scaled back operations as demand for office space declined. The company closed several locations and reduced staff as it restructured to adapt to shifting market conditions.
WeWork in Houston
WeWork currently operates three locations in Houston: Jones on Main at 708 Main, 609 Main in downtown, and 1725 Hughes Landing Boulevard in The Woodlands, according to the WeWork website. An affiliate of WeWork investors also controls a prime high‑rise development site near the intersection of Red River Street and Cesar Chavez in downtown Austin.
By December 2020, WeWork had exited 106 pre‑open or underperforming locations and negotiated more than 100 lease amendments that included rent reductions, deferrals, or tenant improvement allowances. Those actions led to an estimated $4.0 billion reduction in future lease obligations. After these strategic asset exits, WeWork maintains a significant global footprint with 851 locations in 152 cities and more than one million workstations.
“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn,” said Sandeep Mathrani, CEO of WeWork. “As a result, 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.”
Vivek Ranadivé, Chairman and Co‑CEO of BowX Acquisition Corp., added, “This company is primed to achieve profitability in the short term, but the long‑term opportunity for growth and innovation is what made WeWork a perfect fit for BowX. With a solid core business, I see WeWork at an inflection point, backed by an impressive roster of members and the vision and leadership to digitize a large industry.”
Shaquille O’Neal Involved
Ranadivé is the owner of the NBA’s Sacramento Kings. Former NBA star Shaquille O’Neal serves as an advisor to BowX.
The transaction will be financed with BowX’s $483 million cash in trust, plus a fully committed $800 million private placement investment priced at $10.00 per share. That private investment is led by major investors including Insight Partners; funds managed by Starwood Capital Group; Fidelity Management & Research Company LLC; Centaurus Capital; and funds and accounts managed by BlackRock.
Marcelo Claure, Executive Chairman of WeWork, commented, “SoftBank has always seen the potential in WeWork’s core business to disrupt the commercial real estate industry and reimagine the workplace. Today, we take another step toward making that vision a reality. The pandemic has fundamentally changed the way we work, and WeWork is well positioned to capitalize on a future driven by digital technology and a renewed appreciation for flexible workspace. We look forward to having BowX as our partner as we enter the next chapter.”
Industry Leaders React
Barry Sternlicht, Chairman and CEO of Starwood Capital Group, said, “The commercial real estate industry has experienced a seismic shift and the future of work is being redefined in real time. WeWork is the leader in flexible space, with a globally recognized brand.”
Deven Parekh, Managing Director at Insight Partners, added, “With COVID accelerating the adoption of flexible workspace around the globe, WeWork is uniquely positioned to meet rising demand in a dynamic market. As leaders in growth investing across technology and software, we are excited to bring our decades of experience to further accelerate WeWork’s expanding digital platform.”
March 26, 2021 Realty News Report Copyright 2021
File: WeWork Merging with SPAC to Become Publicly Traded
File: (2) WeWork Merging with SPAC called BowX. Starwood Capital. Vivek Ranadivé