WeWork Plans to Merge With a SPAC to Go Public
BowX Acq Corp Will Join With WeWork
Co-working space company WeWork has agreed to merge with a SPAC called BowX Acq Corp (BOWX) in order to go public. WeWork made plans to pursue a traditional IPO about two years ago, but these plans unraveled.
BowX raised $420 million as an empty shell last year and then began looking for a business to take public. Shares of the blank check company climbed on news that it will merge with WeWork.
WeWork’s Business Model
WeWork signs long-term leases with landlords. It then renovates and furnishes spaces and subleases offices and conference rooms to businesses and individuals. These subleases are sometimes as short as one month.
The pandemic created significant hardships for WeWork. Its clients were able to pull out of leases quickly when the world began working from home, but WeWork was left locked into long-term agreements with its landlords. WeWork’s occupancy rate around the world tumbled to 47% during 2020 and it lost $3.2 billion.
The Future of WeWork and Coworking
BowX values WeWork at $9 billion including debt. This is far lower than WeWork’s $47 billion valuation from 2019. The past two years have been tumultuous for WeWork because of its failed IPO and the pandemic.
However, some investors have high hopes for WeWork’s future and for the coworking industry as a whole. A number of companies will likely continue to offer remote work options even after the pandemic subsides. Meanwhile, some office workers have grown weary of working at home during the pandemic. WeWork may be able to provide a useful solution during a time of changing norms in the way workers and employers are thinking about the role of offices.
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