Sonder to go public via SPAC merger worth $2.2bn

Paul Stevens Paul Stevens Uploaded 30 April 2021

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US: Short-term lodging company Sonder has announced it has entered into a definitive agreement with special purpose acquisition company [SPAC] Gores Metropoulos II, sponsored by an affiliate of The Gores Group, to go public via a merger.

The combined technology-driven hospitality company is expected to have a pro forma enterprise value of $2.2 billion and over $700 million of net cash at closing.

Sonder is aiming to raise $650 million in cash proceeds from Gores Metropoulos II before expenses, including fully committed PIPE [private investment in private equity] of $200 million from institutional investors including Fidelity Management & Research Company LLC, BlackRock, Atreides Management, LP, Moore Capital Management, Principal Global Investors, LLC, and Senator Investment Group.

Goldman Sachs is serving as exclusive financial advisor to Sonder, while Wilson Sonsini Goodrich & Rosati is serving as legal advisor to Sonder. Meanwhile, Morgan Stanley is serving as lead financial advisor, Deutsche Bank and Citigroup are serving as capital market advisors to Gores Metropoulos II, and Moelis & Company and Weil, Gotshal & Manges acted as additional financial advisors and legal advisors respectively.

The transaction is expected to close in the second half of 2021.

Co-founded in 2014 by CEO Francis Davidson and global head of real estate, Martin Picard, Sonder now operates more than 300 properties across 35 markets in eight countries.

Sonder works directly with real estate developers and property owners to lease, manage and operate spaces, providing guests with “exceptionally designed accommodations at affordable prices on a nightly, weekly or monthly basis”.

Sonder co-founder and CEO, Francis Davidson, said: “Through innovative technology and thoughtfully designed accommodations, Sonder is revolutionising the hospitality industry. With modernised service, we are delivering uncompromising quality with inspiring design, and offering accommodations at a price point that democratises access to an extraordinary hospitality experience.

“We are incredibly excited about this transaction with Gores, which we view as a natural extension of our longstanding relationship that will enable us to accelerate our growth on the path to build the iconic 21st century brand in hospitality,” he added.

Alec Gores, chairman and CEO of The Gores Group, and CEO of Gores Metropoulos II, said: “Sonder’s differentiated, tech-driven platform and unique value proposition have put the company at the forefront of the hospitality industry. With its enormous market opportunity and experienced leadership team, Sonder has already proven the resiliency and scalability of its business and has tremendous potential to continue expanding globally amid tailwinds created by the impending travel recovery.

“This transaction strikes at the core of our continued focus on identifying and partnering with companies that are true disruptors in their industries, and we’re confident that our partnership will enable Sonder to solidify its leading position as the hospitality brand of tomorrow,” he added.

Dean Metropoulos, chairman of Gores Metropoulos II, said: “Throughout the course of my career I’ve been focused on finding and developing unique consumer brands and experiences. Sonder’s fresh approach to hospitality meets the needs of an evolving traveller and puts the company in a great position to take advantage of these rapidly transforming trends.”

The merger will not only provide Sonder with additional capital and expertise to accelerate and roll out its version, but it will also allow the company to capitalise on further opportunities within the growing $800+ billion global lodging market and strengthen its position as an innovator in the hospitality industry.

In the coming years, Sonder is planning to continue to invest in technology, expand its footprint and product offering, and deliver  even greater value to its real estate partners.

Sonder expects to achieve approximately $4 billion of revenue in 2025, driven by significant real estate supply growth, global travel market recovery and revenue enhancement initiatives.

Existing Sonder stockholders will retain 74 per cent ownership in the pro forma company. Davidson will continue to serve in his role as CEO and Sanjay Banker will continue as president and CFO, following the closing of the proposed business combination.

News of the talks were first revealed just three weeks ago, and Sonder, which was last valued at around $1.3 billion following a $170 million Series E funding round last summer, was initially rumoured to be set for a $2.5 billion-plus valuation.

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