Nearly two years after failing to launch an initial public offering (IPO) as The We Company, office-space rental firm WeWork has agreed to a business combination with a blank-check company that places a pro forma valuation of $9 billion on WeWork. Special-purpose acquisition company (SPAC) BowX Acquisition Corp. (NASDAQ: BOWX) is showering $1.3 billion in cash on WeWork in the reverse merger

In September of 2019, WeWork was set to begin its IPO roadshow with a valuation of $47 billion. The deal started to go sideways after reports that potential investors were concerned about We’s massive losses and its cozy deals with co-founder and CEO Adam Neumann.

The combination with BowX includes $484 million the SPAC currently holds in trust by public investors in BowX and a fully committed $800 million in a private investment in public equity (PIPE) offering that includes Insight Investors, Starwood Capital Group, Fidelity Management, Centaurus Capital and BlackRock.

Vivek Ranadivé, board chair and chief executive of BowX, said, “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.”

That’s an interesting comment. In 2019, commercial real-estate investor Sam Zell, commenting on WeWork’s potential IPO, said the model resembled the defunct savings and loan business, “creating long-term liabilities and short-term assets.” Zell, a WeWork critic with his own dog in the hunt, also commented, “Every single company in this space has gone broke.” Not entirely true, as London-traded IWG can attest.

The BowX-WeWork transaction is expected to close in the third quarter of this year and already has been approved by the boards of both companies. No mention of a new ticker symbol.

BowX and WeWork project 2021 revenue of $3.2 billion, equal to posted revenue in 2019 and 2020. By 2024, revenue (excluding China) is forecast at $7 billion with the bulk of the revenue coming from the company’s core leasing business. Adjusted EBITDA losses are expected to be cut in half this year, dropping from $1.8 billion last year to $900 million. WeWork forecasts positive EBITDA of $500 million next year, growing to $2 billion in 2024. EBITDA margin is expected to more than double between 2022 (around 11%) to 29% in 2024.

In a presentation for investors, WeWork forecast total occupancy rising from 47% in 2020 to 95% in 2024. As of June 30, the company estimates it will have net debt of $660 million, not including $2.2 billion in SoftBank senior unsecured notes. WeWork’s estimated total net funded debt at June 30 of $2.247 billion includes $665 million cash, the Softbank notes, $669 million in other senior notes, and $43 million in subsidiary debt.

The company’s debt picture looks a lot better since SoftBank wrote down about $7.6 billion in WeWork’s valuation in June of last year.

BowX stock traded up about 6.2% in Friday’s premarket session at $10.33 in a post-IPO range of $9.65 to $12.08. The high was posted in early January, following the company’s October IPO.

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