San Francisco, March 27 (SocialNews.XYZ) WeWork has now entered into an agreement with Indian-American Vivek Ranadive-led blank-check firm BowX Acquisition Corp., providing for a business combination that will result in the co-sharing workspace company becoming a publicly listed company.
The transaction values WeWork at an initial enterprise value of approximately $9 billion, WeWork said on Friday.
The move comes after WeWork's failed attempt to go public in 2019 and dramatic fall in its valuation.
Following the setback, Japan-based technology investor SoftBank took 80 per cent ownership of the company and infused into it $5 billion in new financing.
The new transaction is expected to close by the third quarter of 2021, subject to receipt of BowX stockholder approval, and the satisfaction of other customary closing conditions.
The transaction will provide WeWork with approximately $1.3 billion of cash which will enable the company to fund its growth plans into the future.
"This company (WeWork) is primed to achieve profitability in the short-term, but the added long-term opportunity for growth and innovation is what made WeWork a perfect fit for BowX," Vivek Ranadive, Chairman and Co-CEO of BowX Acquisition, said in a statement.
Following the closing, Vivek Ranadive of BowX and Deven Parekh of Insight Partners will join the company's Board of Directors.
"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 towards making that vision a reality," said Marcelo Claure, the SoftBank CEO and Executive Chairman of WeWork.
"The pandemic has fundamentally changed the way we work, and WeWork is incredibly well positioned to springboard into a future propelled by digital technology and a new appreciation of the value of flexible workspace. We look forward to having BowX as our partner as we look to the next chapter."
Since 2019, WeWork has made significant progress towards transforming its business through a strategic plan that included robust expense management efforts, exits of non-core businesses, and material portfolio optimisation, which contributed to a dramatically improved cost structure.
Over the course of 2020, WeWork said it improved its free cash flow by $1.6 billion through cost cutting measures including reducing SG&A expenses by $1.1 billion and trimming building operating expenses by $400 million.
The company also exited all of its non-core ventures and streamlined headcount by 67 per cent from its peak in September 2019.
The company's 2020 revenue, excluding China, was $3.2 billion, which is flat compared to 2019, even after exiting non-core businesses and despite significant headwinds from Covid-19.
Going forward, WeWork intends to expand beyond its core business through its On Demand, All Access, and Platform offerings, enabling users to choose from their WeWork mobile app when, where, and how they work.
"WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn," Sandeep Mathrani, CEO of WeWork, said in a statement.
"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."
Claure and Mathrani will continue to lead WeWork as Executive Chairman and Chief Executive Officer, respectively.
Source: IANS
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