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Through innovative technology and thoughtfully designed accommodations, Sonder is revolutionizing the hospitality industry
Combined company to have an estimated pro forma enterprise value of approximately $2.2 billion
Business combination includes $650 million of cash proceeds from Gores Metropoulos II before expenses, including fully committed PIPE of $200 million from top-tier institutional investors, including Fidelity Management & Research Company LLC, funds and accounts managed by BlackRock, Atreides Management, LP, entities affiliated with Moore Capital Management, Principal Global Investors, LLC, and Senator Investment Group
Proceeds from the business combination will be used to continue global growth and expansion and increase investments in technology to drive an elevated guest experience
Sonder Holdings Inc. ("Sonder" or the "Company"), a leading next-generation hospitality company that is redefining the guest experience, and Gores Metropoulos II, Inc. (NASDAQ:GMIIU, GMII and GMIIW))))), a special purpose acquisition company sponsored by an affiliate of The Gores Group, LLC, a global investment firm founded in 1987 by Alec Gores, and by an affiliate of Dean Metropoulos of Metropoulos & Co., today announced that they have entered into a definitive agreement (the "Merger Agreement") to combine. The technology-driven hospitality business is expected to have a pro forma enterprise value of $2.2 billion and over $700 million of net cash at closing.
Sonder officially launched in 2014 and was co-founded by Francis Davidson, Chief Executive Officer, and Martin Picard, Global Head of Real Estate. Since its founding, Sonder has executed against its mission to transform the hospitality industry through modern, technology-powered service and inspiring, thoughtfully designed accommodations combined into one seamlessly managed experience. Sonder currently 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. Led by a management team with deep technology, operational and hospitality experience, the Company's tech-enabled, mobile-first platform provides seamless booking, digital concierge and a unified, on-demand platform for maintenance and service. Driven by Sonder's differentiated digital service model, the Company can reduce operating costs by as much as 50% compared to traditional hotels.
"Through innovative technology and thoughtfully designed accommodations, Sonder is revolutionizing the hospitality industry," said Francis Davidson, Sonder's co-founder and CEO. "With modernized service, we are delivering uncompromising quality with inspiring design, and offering accommodations at a price point that democratizes 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."
"Sonder's differentiated, tech-driven platform and unique value proposition have put the company at the forefront of the hospitality industry," said Alec Gores, Chairman and CEO of The Gores Group and CEO of Gores Metropoulos II. "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."
"Throughout the course of my career I've been focused on finding and developing unique consumer brands and experiences," said Dean Metropoulos, Chairman of Gores Metropoulos II. "Sonder's fresh approach to hospitality meets the needs of an evolving traveler and puts the company in a great position to take advantage of these rapidly transforming trends."
The business combination will provide Sonder with additional capital and expertise to accelerate and supercharge Sonder's vision. Together with GM II, Sonder will be able to further capitalize on opportunities within the growing $800+ billion global lodging market and strengthen its position as a differentiated, rapidly growing innovator in the hospitality industry. Over the next few years, Sonder plans to continue investing in technology and expanding its footprint and product offering to drive an unparalleled guest experience, while also delivering 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.
Transaction Overview
The combined company is expected to have an estimated pro forma enterprise value of approximately $2.2 billion at closing, representing 3.6x Sonder's projected 2022 revenue. Existing Sonder stockholders will retain 74% ownership in the pro forma company.
Concurrently with the consummation of the transaction, additional investors have committed to participate in the proposed business combination by purchasing shares of common stock of GM II in a private placement (the "PIPE"). The $200 million PIPE investment is led by an affiliate of The Gores Group, with participation from top-tier institutional investors, including Fidelity Management & Research Company LLC, funds and accounts managed by BlackRock, Atreides Management, LP, entities affiliated with Moore Capital Management, Principal Global Investors, LLC, and Senator Investment Group. The balance of the $450 million in cash is held in GM II's trust account, in addition to $165 million raised as part of a March 2021 convertible notes offering led by Moore Strategic Ventures, the privately held investment company for Louis M. Bacon, Founder and CEO of Moore Capital Management, LP, together with the approximately $200 million in PIPE proceeds, excluding transaction expenses, will be used to fund operations and support new and existing growth initiatives. All references to available cash are subject to any redemptions by the public stockholders of GM II and payment of transaction expenses.
The proposed business combination, which has been unanimously approved by GM II's Board of Directors and Sonder's Board of Directors, is expected to close in the second half of 2021, subject to approval by GM II's stockholders and other customary closing conditions.
Following the closing of the proposed business combination, Sonder will retain its experienced management team. Mr. Davidson will continue to serve as CEO and Sanjay Banker will continue to serve as President and CFO.
Advisors
Goldman Sachs & Co. LLC is serving as exclusive financial advisor to Sonder. Wilson Sonsini Goodrich & Rosati is serving as legal advisor to Sonder.
Morgan Stanley & Co. LLC is serving as lead financial advisor and Deutsche Bank Securities Inc. and Citigroup are serving as capital markets advisors to GM II. Moelis & Company LLC acted as additional financial advisor to GM II. Weil, Gotshal & Manges LLP is serving as legal advisor to GM II.
Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, Citigroup and Deutsche Bank Securities Inc. are serving as joint lead placement agents on the PIPE. Latham & Watkins LLP is serving as legal advisor to the co-placement agents.
Investor Webcast
Management of Sonder and GM II will host an investor conference call on Friday, April 30, 2021 at 10 am EST to discuss the proposed business combination. The call can be accessed by dialing +1.844.385.9713 (domestic toll-free number) or +1.678.389.4980 (international) and providing the conference ID 789503#. A webcast of the call can be accessed by visiting https://www.netroadshow.com/nrs/home/?show=959b3eb0
