China’s co-working market has well passed its initial growth stage and is shifting quickly to maturity. The completion of this transition is marked today by the largest merger ever in China’s co-working field between two top players in the market. China’s co-working unicorn URWork inked an agreement with another rival New Space for a strategic merger, the latter announced today.

The market valuation of the merged entity would hit an impressive RMB 9 billion (US$1.31 billion), the firm disclosed. Beijing-headquartered URWork has raised to unicorn status in January this year after pocketing an RMB 400 million worth of round, the largest capital injection in the vertical so far. Given URWork’s latest round booked a valuation of RMB 7 billion, it puts New Space’s valuation at roughly around RMB 2 billion. A new name for the company has not been mentioned.

Mao Daqing, CEO of URWork, was announced to take the post of board chairman and to co-CEO the new entity with Wang Shengjiang, CEO of New Space, after the merger. The two companies will maintain their independent status with team structures unchanged. The tie-up mainly lies in the sharing of resources.

Both of the two companies were launched in 2015, the year that marked the full boom of China’s co-working industry. As the first unicorn in this vertical, URWork has landed more than RMB 1.2 billion in fundings in overall six found of financing. It runs 66 locations in 18 cities around the globe.

New Space was founded by entrepreneur and educator Yu Minhong (Michael Yu) and senior banker Sheng Xitai. The duo also run Aplus Fund, a startup fund focused on AI, fintech, and entertainment. As of present, New Space is operating more than 30 locations in 13 cities. It has incubated over 200 projects, of which nearly 70% have secured angel or A round funding.

What does URWork &New Space merger mean for WeWork?

Rumors of the URWork and New Space merger have been around since at least last year when local media reported a possible merger between the two March last year. URWork CEO Mao Daqing denied the merger at the time. While the rumors were 1 year early, they came just after WeWork announced an infusion of US$ 430 million from Chinese investors. The logic at the time was that the merger would be to fend off a powerful overseas player, similar to the Didi-Kuadi merger after Uber entered the China market.

Finally confirmed one year later, it’s not just about fighting for their home turf in China, but on a larger scale for the global market.

Since the second half of 2016, URWork has been accelerating its overseas expansion, starting with Singapore, London, New York and Taiwan. Globalization sure will be a top priority for URWork-New space, which now operates nearly 100 locations in 24 cities around the world. The company said they plan to boost the number to 150 locations in 35 cities in three years.

China’s co-working space industry experienced rapid growth over the past few years. In a crowded vertical where only a few top players could survive, merging with another rival is a good option to stay in the market. New Space itself merged with AA Accelerator back in 2015, while Shanghai-based We+ just merged with CoWork. URWork and New Space merger is not the first case and they sure won’t be the last.