WeWork feels like a Neumann, M&A-OK and IPOh No
Happy Thursday!
This week, Anirban Sen and I scooped how an unlikely figure helped set the spark for SoftBank Group Corp’s $9 billion deal to take WeWork public. Adam Neumann, WeWork’s co-founder and ousted chief executive, met in November with the head of the SPAC that would go on to clinch a deal with WeWork, according to people familiar with the matter.
The introduction between Neumann and BowX Acquisition Corp co-chief executive Vivek Ranadivé over a Zoom call was facilitated by a senior UBS Group AG capital markets banker, the sources said. It preceded discussions the SPAC chief had with WeWork. Neumann played up WeWork’s prospects on the call and the conversation piqued Ranadivé’s interest, the sources said.
Elsewhere, Pamela Barbaglia and I wrote how M&A activity surged globally in the first quarter of 2021 to a year-to-date record, as companies and investment firms rushed to get ahead of changes in how people work, shop, trade and receive healthcare during the COVID-19 pandemic. While the number of deals was up only 6% from a year ago, the total value of pending and completed deals rose 93% to $1.3 trillion, the second-biggest quarter on record, according to data provider Refinitiv.
Dealmakers said a boom in the stock market and low borrowing costs - driven by the Federal Reserve’s loose monetary policies - emboldened companies, private equity funds and blank-check acquisition firms to pursue their dream deals. This is despite the global economy’s failure to have fully recovered as yet from the virus’ financial fallout.
And finally, it was a rough week for IPOs on both sides of the Atlantic. First, shares in Deliveroo plunged by as much as 30% in their trading debut, slicing more than 2 billion pounds off the company’s valuation in a blow to Britain’s ambitions to attract fast-growing tech companies to the London market.
Then, Compass Inc, the U.S. real estate technology firm backed by SoftBank Group, sold shares in its IPO at $18 each, at the lower end of its downsized target range to raise $450 million. In the U.S., it was a sign of investor fatigue for new stocks, with companies already raising over $36 billion through U.S. IPOs this quarter, up more than 360% year on year.
With that, here are the main deal stories we put out this week:
China is considering establishing a stock exchange to attract overseas-listed firms and bolster the global status of its onshore share markets, two people with knowledge of the matter told Reuters.
Neumann was locked in a fierce legal battle at the time with SoftBank over a $3 billion deal for a portion of his and other investors’ stake in the office space-sharing company.
Office supplies retailer Staples said on Wednesday it would evaluate “all alternatives” to acquire ODP Corp, weeks after the Office Depot and OfficeMax owner turned down the bigger rival’s proposal to buy some of its assets.
Billionaire investor William Ackman said that there was nothing to report yet on finding a target for his $4 billion blank-check investment vehicle.
Private equity firm Carlyle Group said an affiliate of Carlyle Aviation Partners, its aviation investment arm, will buy aircraft leasing company Fly Leasing Ltd for an enterprise value of $2.36 billion.
U.S. blank-check company Union Acquisition Corp II said it will buy Latin American softgel maker Procaps Group for an enterprise value of $1.1 billion, the latest deal in Wall Street’s SPAC acquisition frenzy. It confirmed an earlier report by Reuters.
German air shuttle startup Lilium said it would float on the U.S. stock market via a reverse merger with Qell Acquisition Corp, a blank-cheque acquisition company, in a deal valuing the combined business at $3.3 billion.
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Have a great long weekend,
Josh
Joshua Franklin
M&A, IPO and corporate finance correspondent
Reuters News
See my stories at Reuters.com or follow me @ReutersJF