WeWork Will Go Public in a Merger With a SPAC

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“We looked at our plan, we see what we accomplished in 2020 — and we’ve seen a path to profitability — and we thought it was a good time to raise additional liquidity,” Sandeep Mathrani, WeWork’s chief executive, told CNBC on Friday.

In the past, the company has struggled to meet lofty projections. Even if flexible work arrangements do become more commonplace, WeWork could face intense competition for tenants. New York, London, San Francisco and other big cities are awash with cheap sublet space put on the market by businesses that are planning to have fewer people working from offices all the time.

Landlords may also balk at doing business with co-working companies after they racked up huge losses during the pandemic; some, like Knotel, shut down. Building owners may also decide to offer tenants flexible space themselves, cutting out co-working middlemen like WeWork.

“If I am an office landlord, the Covid experience may have told me, yes, people need flexible space,” said Daniel Ismail, senior analyst at Green Street, a real estate analysis and consulting firm. “But what form should I provide that in? Should I do that myself or partner with someone?”

Some analysts said WeWork might still face financial pressures after any cash infusion. Its debt has grown, and it appears that its lease obligations — the amount of money WeWork owes landlords — are still burdensome, said Vicki Bryan, chief executive of Bond Angle, a research firm that specializes in debt.

“They haven’t resolved the problem with their business model — they have high leases,” she said.

But in a sign that Wall Street investors are optimistic about WeWork, shares of BowX were up about 10 percent in afternoon trading after the merger was announced.

The path to a deal was cleared last month when Adam Neumann, a co-founder of WeWork, and SoftBank settled a legal dispute.