SoftBank Decides Against Buying £2.45bn Stock in WeWork

On the 1st April, major WeWork shareholder SoftBank decided against buying £2.45 billion in the start-ups shares. This comes as a huge blow to co-founder and former CEO Adam Neumann, who will now be unable to sell his $970 million in shares as part of the collapsed deal.

This recent news is the latest issue in a long and difficult year for the company, which resulted in Neumann’s net worth plummeting from an estimated $4.1 billion at the start of 2019 to a current estimation of $750 million.

In January last year, WeWork had been valued at $47 billion, SoftBank at the time having invested a total of over $10 billion. Following this, the first half of 2019 saw WeWork suffer more than $900 million in losses, exposing major flaws in the start-up’s business model to both the public and investors. This subsequently sank the business’s IPO that was planned for last September.

Despite WeWork’s struggles throughout 2019, in October 2019 SoftBank announced it would invest an additional $3 billion (£2.45 billion) giving this major investor control over the start-up.

During this period, Neumann also stepped back from his position as CEO, and gave up voting rights in the company. Neumann also had the right to sell his $970 million shares in WeWork to SoftBank, however, with the deal now off the table this will not be possible.

The Guardian has reported that Neumann is threatening to sue its major investor after pulling out of the deal, reporting that a special committee of the start-up’s board are disappointed with this latest move from SoftBank, and was subsequently considering “all of its legal operations, including litigation”.

SoftBank have said they had “no choice” but to scrap this deal, as WeWork failed to uphold several of the deal’s conditions in addition to concerns on “multiple, new, and significant pending criminal and civil investigations”.

SoftBank have further stated that “The termination of the tender offer will have no impact on WeWork’s operations, customers, five-year business and strategic plan, or the vast majority of WeWork’s current employees”

Pilcher London
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