WeWork announces its plan to merge with BowX Acquisition Corp for a deal worth $9 billion

On Friday, WeWork announced its plans to go public through a merger with blank-check firm BowX Acquisition Corp. [BOWXU] This merger deal would be worth around  $9 billion. The office-sharing startup said the deal marks a steep drop from the $47 billion the loss-making company was worth in 2019 ahead of its botched initial public offering that imploded due to investor concerns over its business model and its founder Adam Neumann’s management style. 

Japanese conglomerate SoftBank Group Corp, which first made public its investment in WeWork in 2017, said it would retain a majority stake as the company looks to steer itself out of the pandemic-induced slowdown. Vivek Ranadivé, the founder of Bow Capital Management, which is backing the SPAC, told CNBC in an interview, “We believe that WeWork is going to be the opportunity stock for the recovery.” Bow capital also said it counted NBA star Shaquille O’Neal as an adviser.

In the early trading on the NASDAQ, The SPAC’s shares rose about 5%. In the interview, WeWork Chief Executive Officer Sandeep Mathrani said WeWork was approached by BowX and other SPACS in December. He further added, “We thought it was a good time to raise additional liquidity to make sure that we have a path to profitability.” 

According to a source, SoftBank and other investors have agreed to a one-year lock-up on their shares. WeWork said Current shareholders, would own about 83% of the combined company.