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Nach mißlungenem IPO will WeWork über ein SPAC an die Börse

Kate­gorie: Deals
Foto: WeWork Office in Boston, USA
6. April 2021

WeWork has agreed to go public through a merger with blank-check firm BowX Acqui­si­tion Corp in a deal that values the office-shar­ing startup at $9 billion includ­ing debt.

It marks a steep drop from the $47 billion that WeWork was valued for a list­ing in 2019, ahead of a botched list­ing plan that imploded due to investor concerns over its busi­ness model and its founder Adam Neumann’s manage­ment style.

Even though WeWork has long lost billions of dollars, it always found ways to attract huge invest­ments from deep-pock­­eted investors. Now, less than two years after it was rescued from a collapse, the co-work­ing company has found yet another backer will­ing to over­look its losses. The company announced on Friday that it had agreed to merge with a blank-check firm in a deal that would give it a list­ing on the stock market it was denied when it was forced to shelve an initial public offer­ing as investors ques­tioned its finan­cial strength and dubi­ous gover­nance prac­tices.

Instead of a tradi­tional I.P.O., WeWork is merg­ing with BowX Acqui­si­tion, a company listed on the stock exchange for the sole purpose of buying a busi­ness, in a type of deal that has become hugely popu­lar in recent months. Investors, bankers, and even celebri­ties and athletes have rushed to float such special purpose acqui­si­tion compa­nies, or SPACs, because they offer their creators a chance to mint huge prof­its rela­tively quickly. And merg­ing with these vehi­cles is attrac­tive to compa­nies like WeWork because they provide an express lane onto the stock market with­out the obsta­cles that scut­tled WeWork’s public offer­ing in Septem­ber 2019.

A SPAC is a shell firm that uses proceeds from a public list­ing to buy a private firm and WeWork is the latest in a slew of high-profile compa­nies that have taken this route to the markets.

“There have been doubts raised about its busi­ness model, and those doubts may be diffi­cult to address in an I.P.O. road­show,” said Michael Klaus­ner, a Stan­ford busi­ness profes­sor, refer­ring to the presen­ta­tions that compa­nies give to mutual funds, pension mangers and other insti­tu­tional investors before a public offer­ing. SPACs are “highly prob­lem­atic” because their struc­ture can encour­age buyers to over­pay, hurt­ing share­hold­ers in return, he said.

In 2021 only, 295 SPACs had gone public (USA, source New York Times), rais­ing $93 billion and break­ing last year’s record in a matter of months. Because so many of these compa­nies are now out there, some have tried to use star power to get busi­nesses to enter­tain their merger offers.

WeWork said the deal with BowX gave it an equity value of $7.9 billion, far less than the nearly USD 50 billion value that its investors placed on the company in 2019. WeWork will receive $1.3 billion in cash from the deal, includ­ing $800 million from Insight Part­ners, Star­wood Capi­tal Group, Black­Rock and other investors.

WeWork will fetch $1.3 billion in cash from the latest deal, includ­ing $800 million in private invest­ment from Insight Part­ners, funds managed by Star­wood Capi­tal, Fidelity Manage­ment and others.

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