Almost two years after WeWork imploded prior to its initial planned public offering, the launch of shared offices will finally be made public.
Friday, WeWork announced a merger with special purpose acquisition company BowX Acquisition Corp. The deal values WeWork at $ 9 billion, far from ridiculously inflated $ 47 billion it was valued in the period prior to its IPO. WeWork, a real estate company with a wild story which rents out a shared workspace to technology startups, opted to delay advertising in 2019 amid revelations of mismanagement and growing debt. Between 2016 and 2019, the company recorded a loss of about $ 4 billion (Well, holding on Kombucha on the tap not cheap, you know).
Then, then WeWork co-founder and CEO Adam Neumann investigated investors after retiring more than $ 700 million in stock options shortly before the scheduled IPO, he agreed to leave office, thousands of employees they lost their jobs and the Securities and Exchange Commission initiated an investigation to disaster.
But now the harassed startup says those days are over.
“WeWork has spent the past year transforming the business and reorienting its core, while simultaneously managing and innovating through a historic recession,” CEO Sandeep Mathrani wrote in a blog post Friday. “As a result, WeWork has become the world leader in flexible spaces with a value proposition that is stronger than ever.”
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WeWork and BowX have been negotiating a possible merger since January, reports the Wall Street Journal. Under the deal, WeWork will receive approximately $ 1.3 billion, including $ 800 million in a private location investment of Insight Partners, as well as funds managed by Starwood Capital Group and Fidelity Management, among others. The merger is expected to close in the coming months, WeWork said.
Like many companies, WeWork has struggled to stay afloat in the midst of the covid-19 pandemic because, as is well known, it is difficult to sell people in a physical workspace when there is a deadly transmissible virus. The company did not pay the rent for some of its locations in April after widespread blockades, Bloomberg reported at the time.
However, with the world slowly reopening backups and companies looking for flexible office space models now more than ever, Bloomberg predicts that this could be WeWork’s chance to shine. And the company’s top companies agree.
“The pandemic has fundamentally changed the way we work and WeWork is incredibly well positioned to jump into a digital technology-driven future and a new appreciation of the value of flexible workspace,” said Executive President Marcelo Claure, on Friday’s blog post.