- WeWork’s platform and global network position the company as a
leader in flexible space, ideally situated to serve the
multi-trillion dollar office space market and the future of
work
- Within the past year, WeWork has made significant progress in
the ongoing transformation of the business with a focus on
cost-management and smart digital innovations
- COVID-19 has accelerated the demand for flexible workspace
among organizations large and small, which WeWork is uniquely
positioned to serve on a global basis
- A significantly improved cost structure combined with strong
demand from WeWork members globally presents a clear path to
positive adjusted EBITDA
- The transaction implies a pro forma initial enterprise value of
approximately $9 billion for WeWork; resulting cash on hand will
enable WeWork to fund its growth plans
- WeWork will receive approximately $1.3 billion, including a
fully committed $800 million private placement investment with key
investors including Insight Partners, funds managed by Starwood
Capital Group, Fidelity Management & Research Company LLC,
Centaurus Capital, and funds and accounts managed by BlackRock
WeWork, the leading flexible space provider, and BowX
Acquisition Corp. (NASDAQ: BOWX, BOWXU and BOWXW) (“BowX”), a
special purpose acquisition company, announced today that they have
entered into a definitive merger agreement, providing for a
business combination that will result in WeWork becoming a publicly
listed company. The transaction values WeWork at an initial
enterprise value of approximately $9 billion. The transaction will
provide WeWork with approximately $1.3 billion of cash which will
enable the company to fund its growth plans into the future.
Sandeep Mathrani, CEO of WeWork, said, “WeWork has spent the
past year transforming the business and refocusing its core, while
simultaneously managing and innovating through a historic downturn.
As a result, WeWork has emerged as the global leader in flexible
space with a value proposition that is stronger than ever. Having
Vivek and the BowX team will be invaluable to WeWork as we continue
to define the future of work.”
Vivek Ranadivé, Chairman and Co-CEO of BowX Acquisition Corp.,
said, “I’m thrilled to partner with Sandeep, Marcelo and the entire
WeWork team as they continue to transform this business and the
real estate industry at large. This company is primed to achieve
profitability in the short-term, but the added long-term
opportunity for growth and innovation is what made WeWork a perfect
fit for BowX. With a fantastic core business, I see WeWork as a
company at an inflection point, with an incredible roster of key
members coupled with the vision and leadership to digitize an
enormous industry.”
Marcelo Claure, Executive Chairman of WeWork, said, “SoftBank
has always seen the potential in WeWork’s core business to disrupt
the commercial real estate industry and reimagine the workplace.
Today, we take another step towards making that vision a reality.
The pandemic has fundamentally changed the way we work, and WeWork
is incredibly well positioned to springboard into a future
propelled by digital technology and a new appreciation of the value
of flexible workspace. We look forward to having BowX as our
partner as we look to the next chapter.”
Barry Sternlicht, Chairman and CEO of Starwood Capital Group
said, “The commercial real estate industry has experienced a
seismic shift and the future of work is now being redefined in real
time. WeWork is the leader in flexible space, with a globally
recognized brand.”
Deven Parekh, Managing Director at Insight Partners, said, “With
COVID accelerating the adoption of flexible workspace around the
globe, WeWork is uniquely positioned to meet rising demand in a
dynamic market. As leaders in growth investing across technology
and software, we are excited to bring our decades of experience to
further accelerate WeWork’s expanding digital platform.”
Marcelo Claure and Sandeep Mathrani will continue to lead WeWork
as Executive Chairman and Chief Executive Officer, respectively,
along with the rest of the company’s highly experienced leadership
team. Following the closing, Vivek Ranadivé of BowX and Deven
Parekh of Insight Partners will join the company’s Board of
Directors.
A Transformed WeWork
Since 2019, WeWork has made significant progress towards
transforming its business through a strategic plan that included
robust expense management efforts, exits of non-core businesses,
and material portfolio optimization, which contributed to a
dramatically improved cost structure.
Over the course of 2020, WeWork improved its free cash flow by
$1.6 billion through cost cutting measures including reducing
SG&A expenses by $1.1 billion and trimming building operating
expenses by $400 million. The company also exited all of its
non-core ventures and streamlined headcount by 67% from its peak in
September 2019. Today, WeWork is a more focused company built
around a core flexible space business that is poised for
substantial growth.
As of December 2020, the company successfully exited 106
pre-open or underperforming locations and executed over 100 lease
amendments for rent reductions, deferrals, or tenant improvement
allowances resulting in an estimated $4.0 billion reduction in
future lease payments. After its strategic asset exits, WeWork
retains an unmatched scale and value proposition worldwide thanks
to its 851 locations in 152 cities, totaling more than one million
workstations. Enterprise companies now make up more than 50% of
WeWork’s memberships, up from just 10% in 2015. Only 10% of
WeWork’s members have month-to-month commitments, while more than
50% have commitments longer than 12 months, contributing to an
average full commitment term of well over 15 months.
As witnessed through the COVID-19 pandemic, WeWork’s strong
business model has demonstrated resilience in an unprecedented
downturn. 2020 revenue, excluding China, was $3.2 billion, which is
flat compared to 2019, even after exiting non-core businesses and
despite significant headwinds from COVID-19.
Amidst its transformation, WeWork has continued to redefine the
flexible workplace market by digitizing its global physical
network. As traditional landlords look to embrace the flexible
model that WeWork pioneered and the market demands, the company
will be well positioned to offer landlords an asset light
technology platform for managing and orchestrating flexible
space.
Going forward, WeWork intends to expand beyond its core business
through its On Demand, All Access, and Platform offerings, enabling
users to choose from their WeWork mobile app when, where, and how
they work. Demand from landlords and members remains strong, and
today WeWork has a $4.0 billion total sales pipeline and an
estimated $1.5 billion in committed 2021 revenue.
Summary of the Transaction
The transaction will be funded with BowX’s $483 million of cash
in trust (assuming no redemptions from the trust account by public
investors of BowX) in addition to a fully committed $800 million
private placement investment at $10.00 per share led by leading
investors including Insight Partners, funds managed by Starwood
Capital Group, Fidelity Management & Research Company LLC,
Centaurus Capital, and funds and accounts managed by BlackRock.
Upon closing, it is expected that the company will have
approximately $1.9 billion of cash on the balance sheet and total
liquidity of $2.4 billion (assuming no redemptions from the trust
account by public investors of BowX), including a $550 million
senior secured notes facility to be provided by SoftBank Group.
The transaction, which has been unanimously approved by the
Boards of Directors of WeWork and BowX, is expected to close by the
third quarter of 2021, subject to receipt of BowX stockholder
approval, and the satisfaction of other customary closing
conditions.
The post-transaction nine-member board will be majority
independent, with the initial board comprised of Mr. Mathrani and
individuals designated by a variety of new and existing investors
to ensure WeWork remains disciplined and aligned with shareholder
interests. After the transaction closes, representatives of
SoftBank Group and SoftBank Vision Fund, independent or acting
together, will comprise a minority number of the nine board
seats.
Additional information about the proposed transaction, including
a copy of the investor presentation, will be provided in a Current
Report on Form 8-K to be filed by BowX today with the Securities
and Exchange Commission (“SEC”) and available at www.sec.gov.
Investor Conference Call
WeWork and BowX will host an investor conference call on March
26, 2021 at 8:30 AM ET to discuss the proposed transaction and
review an investor presentation. The conference call can be
accessed by visiting
https://event.on24.com/wcc/r/3090147/965648CCEEA528A3E6EF972751DAC880
Investor Presentation
A copy of the investor presentation can be found here.
Advisors
PJT Partners is acting as sole financial advisor and Skadden,
Arps, Slate, Meagher & Flom LLP is acting as legal counsel to
WeWork. UBS Investment Bank is acting as sole financial and capital
markets advisor to BowX. Cooley LLP is acting as legal counsel to
BowX.
UBS Investment Bank and PJT Partners are acting as joint
placement agents with respect to the private placement. Paul
Hastings LLP is acting as placement agent counsel.
Morrison & Foerster LLP is acting as legal counsel to
SoftBank Group.
About WeWork
WeWork was founded in 2010 with the vision to create
environments where people and companies come together and do their
best work. Since opening our first location in New York City, we’ve
grown into a global flexible space provider committed to delivering
technology-driven flexible solutions, inspiring spaces, and
unmatched community experiences. Today, we're constantly
reimagining how the workplace can help everyone, from freelancers
to Fortune 500s, be more motivated, productive, and connected. For
more information about WeWork, please visit us at wework.com.
About BowX Acquisition Corp.
BowX Acquisition Corp. is a Special Purpose Acquisition Company
formed by management of Bow Capital, including Vivek Ranadivé, and
Murray Rode. Bow Capital is a venture capital fund bridging the
best of academia, business, and entertainment. Mr. Ranadivé has
four decades of experience and is founder and managing director of
Bow Capital, as well as previous founder and CEO of TIBCO. Mr. Rode
is senior advisor of Bow Capital and former CEO of TIBCO, with over
30 years of experience in tech. For more information, visit:
https://bowcapital.com/bowx/#about.
Additional Information and Where to Find It
This press release relates to a proposed transaction between
WeWork and BowX. This press release is not a proxy statement or
solicitation of a proxy, consent or authorization with respect to
any securities or in respect of the potential transaction and shall
not constitute an offer to sell or a solicitation of an offer to
buy the securities of WeWork, the combined company or BowX, nor
shall there be any sale of any such securities in any state or
jurisdiction in which such offer, solicitation, or sale would be
unlawful prior to registration or qualification under the
securities laws of such state or jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of the Securities Act of 1933, as amended. BowX
intends to file a registration statement on Form S-4 with the
Securities and Exchange Commission (the “SEC”), which will include
a document that serves as a prospectus and proxy statement of BowX,
referred to as a proxy statement/prospectus. A proxy
statement/prospectus will be sent to all BowX shareholders. BowX
also will file other documents regarding the proposed transaction
with the SEC. Before making any voting decision, investors and
security holders of BowX are urged to read the registration
statement, the proxy statement/prospectus and all other relevant
documents filed or that will be filed with the SEC in connection
with the proposed transaction as they become available because they
will contain important information about the proposed
transaction.
Investors and security holders will be able to obtain free
copies of the registration statement, the proxy
statement/prospectus and all other relevant documents filed or that
will be filed with the SEC by BowX through the website maintained
by the SEC at www.sec.gov.
Participants in Solicitation
BowX and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from BowX’s
shareholders in connection with the proposed transaction. A list of
the names of the directors and executive officers of BowX and
information regarding their interests in the business combination
is set forth in BowX’s registration statement on Form S-1
(Registration No. 333-239941) originally filed with the SEC on July
17, 2020. Additional information regarding the interests of such
persons and other persons who may be deemed participants in the
solicitation will be contained in the registration statement and
the proxy statement/prospectus when available. You may obtain free
copies of these documents as described in the preceding
paragraph.
Forward-Looking Statements
Certain statements made in this press release are “forward
looking statements” within the meaning of the “safe harbor”
provisions of the United States Private Securities Litigation
Reform Act of 1995. Such “forward-looking statements” with respect
to the proposed transaction between WeWork and BowX include
statements regarding the benefits of the transaction, the clear
path to positive adjusted EBITDA, WeWork’s ability to continue
self-funding its growth into the future, the amount of cash the
transaction will provide WeWork, the anticipated timing of the
transaction and the products and markets of WeWork. These
forward-looking statements generally are identified by the words
“believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,”
“strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,”
“should,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Many factors could
cause actual future events to differ materially from the
forward-looking statements in this press release, including but not
limited to: (i) the risk that the transaction may not be completed
in a timely manner or at all, which may adversely affect the price
of BowX’s securities, (ii) the risk that the transaction may not be
completed by BowX’s business combination deadline and the potential
failure to obtain an extension of the business combination deadline
if sought by BowX, (iii) the failure to satisfy the conditions to
the consummation of the transaction, including the adoption of the
Merger Agreement by the shareholders of BowX, the satisfaction of
the minimum amount in the trust account following redemptions by
BowX’s public shareholders and the receipt of certain governmental
and regulatory approvals, (iv) the lack of a third party valuation
in determining whether or not to pursue the proposed transaction,
(v) the inability to complete the PIPE investment, (vi) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the Merger Agreement, (vii) the
effect of the announcement or pendency of the transaction on
WeWork’s business relationships, operating results, and business
generally, (viii) risks that the proposed transaction disrupts
current plans and operations of WeWork and potential difficulties
in WeWork employee retention as a result of the transaction, (ix)
the outcome of any legal proceedings that may be instituted against
WeWork or against BowX related to the Merger Agreement or the
proposed transaction, (x) the ability to maintain the listing of
BowX’s securities on a national securities exchange, (xi) the price
of BowX’s securities may be volatile due to a variety of factors,
including changes in the competitive and regulated industries in
which BowX plans to operate or WeWork operates, variations in
operating performance across competitors, changes in laws and
regulations affecting BowX’s or WeWork’s business, WeWork’s
inability to implement its business plan or meet or exceed its
financial projections and changes in the combined capital
structure, (xii) changes in general economic conditions, including
as a result of the COVID-19 pandemic, and (xiii) the ability to
implement business plans, forecasts, and other expectations after
the completion of the proposed transaction, and identify and
realize additional opportunities. The foregoing list of factors is
not exhaustive. You should carefully consider the foregoing factors
and the other risks and uncertainties described in the registration
statement on Form S-4 discussed above, the proxy
statement/prospectus and other documents filed or that may be filed
by BowX from time to time with the SEC. These filings identify and
address other important risks and uncertainties that could cause
actual events and results to differ materially from those contained
in the forward-looking statements. Forward-looking statements speak
only as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and WeWork and BowX
assume no obligation and do not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise. Neither WeWork nor BowX gives any
assurance that either WeWork or BowX, or the combined company, will
achieve its expectations.
Non-GAAP Financial Measures
This press release includes certain financial measures not
presented in accordance with generally accepted accounting
principles in the United States ("GAAP"), including Adjusted
EBITDA, free cash flow and Adjusted EBITDA margin (including on a
forward-looking basis). These financial measures are not measures
of financial performance in accordance with GAAP and may exclude
items that are significant in understanding and assessing our
financial results. Therefore, these measures should not be
considered in isolation or as an alternative to net loss or other
measures of profitability, liquidity or performance under GAAP. You
should be aware that WeWork’s presentation of these measures may
not be comparable to similarly titled measures used by other
companies, which may be defined and calculated differently. WeWork
believes that these non-GAAP measures of financial results
(including on a forward-looking basis) provide useful supplemental
information to investors about WeWork. WeWork's management uses
forward-looking non-GAAP measures to evaluate WeWork's projected
financials and operating performance. Additionally, to the extent
that forward-looking non-GAAP financial measures are provided, they
are presented on a non-GAAP basis without reconciliations of such
forward-looking non-GAAP measures due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliations. See the Investor Presentation referenced
above for reconciliations of our non-GAAP measures to the nearest
GAAP measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210326005197/en/
Investors Chandler Salisbury investor@wework.com
Media Nicole Sizemore / Julia Sullivan
press@wework.com
Gladstone Place Partners Lauren Odell / Felipe Ucrós (212)
230-5930
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