By Dhirendra Tripathi
Investing.com – Shares of BowX Acquisition (NASDAQ:BOWX), a blank-check company that counts Shaquille O’Neal as an adviser, were up 3% in premarket trading Friday on news it has got a merger candidate -- WeWork.
The transaction values the shared-office space provider at $9 billion including debt, a far cry from 2017 when it was valued at $47 billion ahead of its IPO, which subsequently unraveled in spectacular fashion.
The market disruptor had to call off its IPO as murky details of the state of affairs at the company emerged, many related to its co-founder, the talented but erratic Adam Neumann. He had to quit as its chairman and CEO.
As the Softbank-promoted company struggled in the aftermath of a very public implosion, it went about shedding jobs, renegotiating rentals as well as closing office spaces to put its house back in order. Covid-19 gave that exercise more impetus as companies also looked to cut costs and go along with the work-from-home trend.
WeWork is a big player in the market for flexible office space. It signs long-term leases with landlords, renovates the spaces and then subleases small or entire offices and buildings for as little as a month at times.
Bow Capital Management, the SPAC’s sponsor, is run by Vivek Ranadivé, owner of the NBA’s Sacramento Kings and founder of Tibco Software.
A SPAC is a shell company that uses proceeds from an IPO to take private firms public. It is usually set up by high-profile people with relevant industry experience and that’s what gets it the valuation since as such it doesn’t have running operations at the time of going public.