Sonder is merging with special purpose acquisition company Gores Metropoulos II to take the company public.
According to a statement, the combined company is expected to be worth $2.2 billion with proceeds of $650 million.
The valuation is based on 3.6x Sonder’s projected revenue for 2022.
The company, which launched in 2014, currently operates more than 300 properties across eight countries.
Sonder offers a mix of apartment developments which are licensed for hospitality and hotels, which it upgrades with its technology and design features.
Francis Davidson, co-founder and CEO of Sonder, says: “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.”
Alec Gores, chairman and CEO of the Goreces Group and CEO of Gores Metropoulos II, says: "Sonder’s differentiated, tech-driven platform and unique value proposition have put the company at the forefront of the hospitality industry.
"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.”
According to the statement, the merger will “supercharge” Sonder’s vision with the company planning further expansion and investment in technology.
It adds that Sonder anticipates revenue of about $4 billion in 2025, fuelled by real estate supply growth, travel market recovery and “revenue enhancement initiatives.”
Davidson, via a post on LinkedIn, says the company plans to improve its business model with “the aim of transitioning the majority of signings to revenue share.”
He adds that it also plans franchise contracts and will sell its technology to other operators.
Sonder stockholders will retain 74% ownership in the company and the deal is expected to close in the second half of 2021.
The company will retain its management team, including Davidson.
Sonder raised $170 million in Series E last June, calling the investment “validation” of its pivot to longer stay.
* Check out this interview with Davidson, recorded for the How I Got Here podcast in October 2019.