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BowX Acquisition Corporation

BowX Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: WeWork

ENTERPRISE VALUE: $8.966 billion
ANTICIPATED SYMBOL: WE

BowX Acquisition Corp. proposes to combine with WeWork, the leading flexible space provider.  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.

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.

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.

SUBSEQUENT EVENT 8-K LINK 10/18/21

  • Backstop Agreement
    • On October 13, 2021, BowX entered into a backstop subscription agreement with DTZ Worldwide Limited (the “Backstop Investor”), a parent company to C&W, pursuant to which, and on the terms and subject to the conditions of which, the Backstop Investor has committed to subscribe for the number of shares of BowX Class A common stock, par value $0.0001 per share, validly redeemed by the public stockholders of BowX, in connection with the merger between BowX, WeWork, and BowX Merger Subsidiary Corp, a Delaware corporation and a wholly owned subsidiary of BowX, subject to a cap of 15,000,000 Class A Shares. The purchase price for such Class A Shares is equal to $10.00 per share multiplied by the number of Class A Shares validly redeemed by the public stockholders of BowX in connection with the Business Combination subject to the Cap, for an aggregate purchase price of up to $150,000,000 (the “Backstop Investment”).
    • The terms of the Backstop Investment substantially conform to the terms of the subscription agreements that were executed on March 25, 2021 (the “Other Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”), pursuant to which, and on the terms and subject to the conditions of which, the PIPE Investors collectively subscribed for 80,000,000 Class A Shares for an aggregate purchase price equal to $10.00 per share (the “PIPE Investment”) to be consummated substantially concurrently with the closing of the Business Combination (“Closing”). The Backstop Investment will also be consummated substantially concurrently with the Closing.

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.

sources and uses

PIPE 

  • $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.

SPONSOR SUPPORT AGREEMENT

  • The Sponsor and the Sponsor Persons agreed to cause to be forfeited 3,000,000 shares of Class B common stock

LOCKUP

  • The Sponsor, certain of BowX’s officers and certain of WeWork’s officers and stockholders entered into lock-up agreements (the “Lock-Up Agreements”) pursuant to which they agreed not to
    • (a) sell or otherwise dispose of, or agree to sell or dispose of, directly or indirectly, any shares of BowX Common Stock held by such persons immediately after the Closing or any shares of BowX Common Stock issuable upon the exercise of options, warrants or other convertible securities to purchase shares of BowX Common Stock held by such persons immediately after the Closing (“Lock-Up Shares”),
    • (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of such Lock-Up Shares, or
    • (c) publicly announce any intention to effect any transaction specified in clause (a) or (b) (each such action, a “Transfer”), for one year or nine months, as the case may be, after the Closing (the “Lock-Up Period”).
      • 1-year lock-up for BowX Sponsor, LLC, Vivek Ranadivé, Murray Rode, Benchmark Capital Partners VII (AIV) L.P., SB WW Holdings (Cayman) Limited, SVF Endurance (Cayman) Limited, Sandeep Mathrani and Benjamin Dunham.
      • 270 days lock-up for Adam Neumann

NOTABLE CONDITIONS TO CLOSING

  • The amount of cash available in:
    • (x) the trust account, after deducting the amount required to satisfy BowX’s obligations to its stockholders (if any) that exercise their rights to redeem all or a portion of their BowX Class A Common Stock (but prior to payment of
      • (a) any deferred underwriting commissions being held in the Trust Account and
      • (b) any transaction expenses of BowX, WeWork or their affiliates plus
    • (y) the amount of the PIPE Investment actually received by BowX, is equal to or greater than $800,000,000.

NOTABLE CONDITIONS TO TERMINATION

  • If the Closing has not occurred on or before October 31, 2021, subject to extension by sixty (60) days in certain circumstances (the “Agreement End Date”)

ADVISORS

  • PJT Partners is acting as sole financial advisor to WeWork.
  • 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.

MANAGEMENT & BOARD

Executive Officers

Vivek Ranadivé, 62
Chairman & Co-Chief Executive Officer

Mr. Ranadivé has been the Founder and Managing Director of Bow Capital Management LLC and its affiliated funds since 2016 and Chairman, Chief Executive Officer and Governor of the Sacramento Kings since 2013. He founded his first company, Teknekron Software Systems, Inc. (“Teknekron”), in 1986 to develop and apply software to financial trading floors. After selling Teknekron to Reuters PLC in 1994, he then went on to found and spin-out TIBCO as a separate company in 1997. TIBCO completed its initial public offering in 1999 and was subsequently sold to Vista Equity Partners in 2014 for $4.3 billion. As Chairman and Chief Executive Officer, Mr. Ranadive built TIBCO into a leading provider of middleware software that became the central data nervous system for many of the world’s largest companies and government agencies. Mr. Ranadivé became involved in NBA basketball first as Vice Chairman of the Golden State Warriors. Mr. Ranadivé holds a B.S. and M.A. degree in Electrical Engineering from the Massachusetts Institute of Technology and an MBA from Harvard Business School where he graduated as a Baker Scholar.

Murray Rode, 55
Co-CEO, CFO, Secretary, Treasurer & Director

Mr. Rode has over 30 years of experience in the technology industry. He has been a senior advisor and consultant to Bow Capital Management, LLC since December 2019. Mr. Rode joined the predecessor entity to TIBCO in 1995. In 1997, he was instrumental in the creation of TIBCO, as well as its subsequent initial public offering in 1999 and its sale to Vista Equity Partners in 2014. At that time, Mr. Rode became TIBCO’s Chief Executive Officer and a director until April 2019, when he became Vice Chairman through December 2019. Earlier in his tenure at TIBCO, Mr. Rode held a range of progressively responsible positions, including Executive Vice President, Strategic Operations, Chief Financial Officer and Chief Operating Officer. Through his various roles at TIBCO, he also oversaw the expansion of its business through approximately 30 acquisitions, spanning the areas of data analytics, application integration, business process management, streaming data, API management and data management platforms. In addition, Mr. Rode served as a director of the publicly traded company, CallidusCloud, a leading incentive compensation management, sales performance, and connected lead-to-cash solutions provider from 2014 until its sale to SAP in 2018 (it is now part of SAP Sales Cloud). Mr. Rode was a management consultant before joining TIBCO and holds a B.A. degree from the University of Alberta, Canada.

 

Board of Directors

Eric C.W. Dunn, 62
Director

Since April 2016, Mr. Dunn has served as Chief Executive Officer of Quicken Inc., a producer of personal finance software in the United States. Mr. Dunn joined Intuit Inc., Quicken’s previous owner, in 1986, when Quicken was the only Intuit software product. He spent a total of 20 years at Intuit over his career, including as its Chief Financial Officer through its 1993 initial public offering and merger with ChipSoft (TurboTax), as a programmer who worked on almost all of the early versions of Quicken, as the first general manager of the Quicken business, as Intuit’s first Chief Technology Officer and finally as the leader of Intuit’s payments business. Mr. Dunn was previously a General Partner at Cardinal Venture Capital, an investment firm. He was a former director of TIBCO among other companies. Mr. Dunn holds a B.A. from Harvard College and a MBA From Harvard Business School.

Lori Wright, 43
Director

Since October 2019, Ms. Wright has served as the Vice President & General Manager of Gaming Business Development at Microsoft. In this role, she leads global partnerships for the Xbox organization, working across enterprise and consumer organizations to deliver growth opportunities for cloud and console gaming. Prior to this, from April 2017 to October 2019, Ms. Wright served as General Manager for Office 365 collaboration applications, including Microsoft Teams and Outlook, where she oversaw global marketing for these products. Ms. Wright developed her business expertise through previous executive roles including Chief Marketing Officer at BlueJeans Network from April 2016 to April 2017 and Chief Marketing Officer at TIBCO from October 2013 to June 2015. Before joining TIBCO, she served as Vice President at Symantec overseeing worldwide e-commerce sales and strategy for Norton software from 2011 to 2013. Ms. Wright held executive positions within Symantec’s Cloud and Enterprise divisions over her tenure, which began with VERITAS Software. Ms. Wright started her career at Walt Disney World in marketing and sales. She has served as a startup advisor to companies including Color Genomics and ServiceMax, as well as venture firms including Bow Capital. Ms. Wright holds a B.A. in Business, with a major in Finance, from the University of Central Florida.

Vijay Advani, 59
Director 

Since January 2020, Mr. Advani has served as Executive Chairman of Nuveen, the asset manager of TIAA-CREF. He is responsible for Nuveen’s overall strategy and growth with a focus on three key initiatives of the firm: impact and environmental, social and governance (ESG) investing, the further development of Nuveen Labs and growing Nuveen’s business and investment capabilities outside of the U.S. Mr. Advani was previously Chief Executive Officer of Nuveen from 2017 until becoming Executive Chairman and had day-to-day responsibility for the firm. Mr. Advani was previously Co-President of Franklin Templeton Investments, where in a career of more than 20 years from 1995 to 2016, he was responsible for long-term strategic initiatives and the firm’s investment management, trading and global retail and institutional channels. Prior to joining Franklin Templeton, Mr. Advani was at the World Bank from 1984 to 1995 advising governments on developing their financial markets and arranging equity, quasi-equity and debt financing. Mr. Advani is a member of the Board of Governors of the Investment Company Institute (ICI). He also serves on the boards of Jumpstart and the U.S.—India Business Council (USIBC), FCLTGlobal and the Global Impact Investing Network (GIIN). He is also an advisory board member for The Hive Incubator in Palo Alto, charter member of TiE Silicon Valley and past board member of the U.S.—India Strategic Partnership Forum (USISPF) and the Center for the Advanced Study of India (CASI) at the University of Pennsylvania. Mr. Advani is a committee member of the San Francisco-Bangalore Sister City Initiative, member of the India Advisory Committee and Investment Committee at the Santa Clara University (SCU) and former board member of Lok Foundation. He holds a bachelor’s degree from the University of Mumbai and an MBA from the University of Massachusetts Amherst.

ByRoman Developer