Flexible office space provider WeWork is reportedly talking with a special purpose acquisition company (SPAC) in another effort to go public, according to The Wall Street Journal and other news outlets. This attempt comes a year after WeWork’s initial public offering (IPO) fell through.
The WeWork board and company Chief Executive Sandeep Mathrani have been reviewing offers from a Bow Capital Management-affiliated SPAC and another unknown potential acquisition vehicle for several weeks, according to people familiar with the situation. It’s speculated that a deal could earn WeWork a $10 billion valuation, but it’s unknown how much, if any, of that figure includes debt.
Working with an SPAC is not WeWork’s only option, according to sources. The flexible office space provider has also received offers for a new private investment round, The Wall Street Journal reports. If WeWork went that route, it could remain a private entity and use the investment money for its own growth initiatives.
“Over the past year, WeWork has remained focused on executing our plans for achieving profitability,” WeWork Chief Communication Officer Lauren Fritts said in a statement. “Our significant progress combined with the increased market demand for flexible space, shows positive signs for our business. We will continue to explore opportunities that help us move closer towards our goals.”
What a SPAC could do for WeWork
WeWork is no stranger to what’s needed to take a company public. In 2019, company made an effort to gain a listing, but investors were not interested as the flexible office space provider was losing money. Confidence in then CEO Adam Neumann began to wane as well, forcing him to resign. Teaming up with an SPAC would be a significant boost for the entities also known as “blank check companies.” SPACs typically go public without any type of business and then find one to connect with. When the connection is made the target company, in this case WeWork, would become public as well. The SPAC transactions usually take less time than a traditional IPO, which could work in WeWork’s favor this time around. More than 80 new SPACs have debuted in 2021 already, according to data provider SPAC research.
Meanwhile, Mathrani has overseen WeWork when it was losing revenue and in the midst of a pandemic that saw more people working from home. Fortunately for the company it had financial reserves to help keep it afloat, courtesy of a 2019 cash infusion from SoftBank Group Corp, while the pandemic negatively impacted a majority of the commercial office space market. WeWork had also begun to close locations, cut staff and renegotiate leases at the beginning of the pandemic. These moves, combined with SoftBank’s investment, have put WeWork in a position where it doesn’t need cash right away, according to sources. This wasn’t the case when the company’s IPO fell apart in 2019. Mathrani said he expects WeWork to be profitable by the end of this year.
Joe Dyton can be reached at firstname.lastname@example.org.