WeWork, the New York-based shared workspace provider, which became a centrepiece of a protracted legal tussle against SoftBank after the Japanese tech investment conglomerate had attempted to annul an accord to purchase about $3 billion worth of WeWork stocks held by the company employees alongside a co-founder and ex-Chief Executive Adam Neumann on late-2019, said on Friday that the American commercial real estate company had agreed to go public following a merger with a blank-check firm, BowX Acquistion Corp, in a deal which could value the merged entity at roughly $9 billion, completing a stock market listing two years after its failed attempt to go public.
Nonetheless, following a failed attempt to a US public market listing back in mid-2019, Japanese tech investment conglomerate SoftBank had purchased a controlling 79 per cent stake in the company for a lump-sum of $13.5 billion including a disputed accord that had forced SoftBank to purchase roughly $3 billion worth of WeWork stocks held by company employees and Neumann.
However, latest move from WeWork to merge with an SPAC (Special Purpose Acquisition Company) to go public followed an ‘out-of-the-court’ settlement deal earlier this year what sources claimed to have salvaged roughly $500 million for SoftBank.
SPACs or blank check firms are shell entities that could be capitalized on to taking a company public following a merger or acquisition, while SPACs are allowed to raise funds through IPOs or private investments in order to finance their planned mergers or acquisitions without telling their investors about the companies which they have been pursuing.
WeWork takes SPAC route to go public
As beforementioned, in the second half of 2019, WeWork had attempted a US IPO (Initial Public Offerings), however, had pulled off the plugs over investors’ concerns regarding Neumann’s management style alongside the company’s business model, while in September 2019, SoftBank had purchased a controlling stake in the firm and Neumann eventually had stepped down as the CEO.
Sandeep Mathrani succeeded Neumann as the new Chief Executive of SoftBank-owned WeWork and trimmed as many as $1.6 billion in additional expenses in less than a year, WeWork said in a statement. Meanwhile, referring to WeWork’s latest SPAC route to go public, WeWork’s Mathrani said in an interview with CNBC following the announcement, “Sometimes you don’t pick the path (and) a path picks you.
In December, we were approached by BowX and other SPACS. We had seen a path to profitability and we thought it was a good time to raise additional liquidity to de-risk the balance sheet, and to make sure that we have a path to profitability.
” Nasdaq-listed shares’ prices of BowX Acquistion Corp. skyrocketed as much as 20.29 per cent to $11.71 apiece in the day’s Wall St. closure after rising about 8 per cent in pre-market trading following the announcement.