WeWork China, the world’s largest co-working startup’s Chinese arm, merged with Naked Hub, one of its rivals in China, local news service Yicai reports on Thursday. The US company will pay around $400 million for the merger, a source told Bloomberg.
Adam Neumann, co-founder and CEO of WeWork, gave a speech when he announced the merger on Thursday, saying the decision comes as the two companies share the same values and the merger is the best choice for both of them, according to Yicai.
WeWork was founded in 2010 and the company has since quickly expanded in its home country and abroad. The company’s expansion in Asia is backed by Japanese conglomerate SoftBank, who invested $4.4 billion in the co-working company last year. WeWork was valued at around $20 billion post-investment.
China is one of the world’s most people-concentrated country, and the growing startup space boosts the development of the co-working industry. Ucommune is one of WeWork’s most prominent rival in the country. The Chinese company is founded in Beijing in 2015 by an ex-executive of one of China’s largest real estate companies Vanke, MAO Daqing. The company is backed by deep-pocket VCs including Sequoia Capital and Sinnovation Ventures.
In China, WeWork now operates in Beijing, Shanghai and Hong Kong, with a plan to take its shared offices to 8 more Chinese cities. Around the world, the company now has 295 co-working environments. At the same time, Ucommune claims it has built a presence in 20 cities globally and operates 78 co-working spaces as of June 2017.
Naked Hub, the three-year-old-company, was valued at as much as $1 billion in a Series C round at the end of last year. It runs 44 co-working space in China, Australia, Vietnam and the UK, according to a report by Deal Street Asia. The company announced to merge with Singapore’s co-working startup JustCo in July 2017 but the deal was called off. The startup was also reportedly grappling to land its Series C round of financing.
Other formidable competitors to WeWork in China include KrSpace, who claimed an RMB 600 million (approx. $ 95.5 million) Pre-B round in January this year, marking the largest financing in China’s co-working space to date.