WeWork is buying Chinese co-working startup Naked Hub as part of a continued expansion in the world’s most populous country.
New York-based WeWork, the largest global co-working company, will pay about $400 million for the three-year-old Chinese business, according to two people familiar with the matter, who asked not to be identified because the terms are private. The majority will come in the form of equity, one of the people said.
Adam Neumann, chief executive officer at WeWork, said that the two companies were drawn to each other because of their similar cultures and want to do more than provide office space for money. “WeWork is not a co-working company,” he said. “WeWork is as much a co-working space as Amazon is a bookstore.”
WeWork, which rents desks or offices to freelancers and other workers, is pushing aggressively into Asia. The company’s China ambitions began in 2016 with an office in Shanghai, and it now has more than 10,000 members across 13 offices in Shanghai, Beijing and Hong Kong. Last year the company raised $4.4 billion from SoftBank Group (sftby) for its global operations and a trio of new Asia subsidiaries. The funding valued WeWork at about $20 billion.
While WeWork dominates the U.S. market, it faces strong homegrown competition in China, where numerous co-working companies compete for space and customers. Late last year, WeWork battled with another Chinese co-working company, then called UrWork. WeWork sued over trademark claims, and UrWork agreed to change its name to Ucommune. Among its other competitors is Kr Space, a Beijing-based startup backed by IDG Capital.
This year, WeWork plans to add locations in Shenzhen, Suzhou, Hangzhou, Chengdu, Nanjing and Wuhan. WeWork said it expects the majority of its growth this year to happen outside the U.S.
Naked Hub is the co-working arm of Shanghai-based luxury resort company Naked Retreats. It has 10,000 members and has outlined plans for more than 30 locations, mostly in Shanghai and Beijing, along with locations in Australia, Hong Kong and Vietnam. The chain focuses on environmental sustainability and stripped-down architecture. One of its Beijing locations has an indoor swimming pool. Naked Hub has about 200 employees, who will join WeWork’s 250 workers in China.
The deal “was a hard decision, but it was the right decision for us,” said Naked Hub founder Grant Horsfield. “This allows us to make our dreams bigger and quicker.”
WeWork has been on a shopping spree for the past year, though Naked Hub is only its second-ever acquisition of a co-working company. The first was Singapore-based SpaceMob in August. The deep-pocketed company has mainly used deals as a way to branch into new businesses, such as coding schools, event planning and digital marketing.