Lodging startup Sonder, which decks out apartments and hotel rooms as hip short-term rentals, is in talks to merge with blank-check company Gores Metropoulos II Inc., according to people familiar with the matter.
A transaction between Sonder and the Gores special purpose acquisition company, or SPAC, is set to value the combined entity at more than $2.5 billion, said one of the people, who asked not to be identified because the matter is private. Terms haven’t been finalized and talks could still fall apart.
Representatives for Sonder and Gores declined to comment.
Last year, Sonder reached a valuation of $1.3 billion after a funding round.
The company has raised more than $560 million to date and is backed by investors including Fidelity Investments, WestCap, Inovia Capital, Valor Equity Parters, Greenoaks Capital, Greylock Partners and Spark Capital.
Gores Metropoulos II, led by chairman Dean Metropoulos and Chief Executive Officer Alec Gores, raised $450 million in a January initial public offering.
San Francisco-based Sonder first refurbishes short-term rentals and lists them on its website, as well as with Airbnb Inc. and Expedia Group Inc.’s Vrbo. Sonder, which has taken over other buildings including old hat factories and police stables, has also expanded in recent years to work with hotels.
For More: Sonder Takes Airbnb-Aesthetic to Hotels in New York, London
Sonder CEO Francis Davidson began experimenting with amenities when he was managing apartments as a McGill University student in Montreal. Davidson founded Sonder in 2012 with Martin Picard, and told Bloomberg News in 2019 that the company had ambitions of raking in more revenue than Marriott by 2025.
— With assistance by Katie Roof