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UPDATE 3-Lodging startup Sonder agrees to go public via $2.2 bln SPAC deal

(Adds quotes, deal background, share price)

April 30 (Reuters) - Lodging startup Sonder, which offers refurbished properties for short-term rentals, has agreed to go public through merging with a blank-check firm backed by billionaire investors Alec Gores and Dean Metropoulos that values the combined company at around $2.2 billion.

The deal with Gores Metropoulos II will give the hospitality startup $650 million of cash proceeds, including a private placement of $200 million from investors such as Fidelity Management & Research Company LLC and BlackRock Inc .

Shares of Gores Metropoulos II rose 0.5% in afternoon trading on Friday.

San Francisco-based Sonder works with real estate developers, who build the properties that Sonder later operates under its brand name. The business was heavily impacted when the global pandemic brought the travel industry to a halt last year, but has rebounded as it targets millennial leisure travelers, said Chief Executive and co-founder Francis Davidson.

Sonder reported $116 million in revenue last year, a 19% drop year-over-year. It operates over 300 properties in 35 markets, with plans to invest in tech, expand to news regions, and sign more properties.

“I think you can view us as a next-generation Marriott,” Davidson said, adding that Sonder partners with companies including Expedia Group Inc, Airbnb Inc and Booking.com to reach out to customers.

Sonder expects to hit $4 billion of revenue in 2025 and touts its technology-driven service model can reduce operating costs compared with traditional hotels.

Launched in 2014, Davidson came up with the idea for Sonder while managing a few apartments for short-term stays as a university student in Montreal.

GM II raised $450 million through an initial public offering in January. Gores Group, a prolific dealmaker in the space, has raised 13 special purpose acquisition companies (SPACs) so far. SPACs are shell companies that raise funds to take a private company public through a merger at a later date.

Goldman Sachs serves as the financial advisor to Sonder, while Morgan Stanley is the lead financial advisor to Gores Metropoulos. (Reporting by Sohini Podder in Bengaluru; Editing by Ramakrishnan M. and Nick Zieminski)

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