SoftBank to Take Control of WeWork - The Wall Street Journal

WeWork, which had a goal to dominate the shared-office-space market, went from a hot startup to a bailout candidate in a month. Photo: kate munsch/Reuters

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Maureen Farrell

Maureen Farrell
The Wall Street Journal
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Updated Oct. 22, 2019 8:38 am ET

SoftBank Group Corp. won approval from WeWork’s board to take control of the troubled co-working startup, in a deal that would hand co-founder Adam Neumann nearly $1.7 billion and sever most of his ties with the company.

WeWork, in danger of running out of cash in the coming weeks, chose a rescue offer from SoftBank over a competing proposal from JPMorgan Chase & Co., according to people familiar with the matter. It had asked both parties to submit proposals by a deadline yesterday.

The deal is expected to value the company at about $8 billion, a far cry from what it was expected to fetch in an initial public offering earlier this year and even less than the $47 billion at which a January investment from SoftBank pegged its worth.

As part of the deal, SoftBank, which already owns about a third of the company, is to buy nearly $1 billion of stock in WeWork’s parent from Mr. Neumann, who was forced out as chief executive after pushback from new investors scuttled the IPO. The Japanese conglomerate will also extend him roughly $500 million in credit to help repay a loan facility of the same amount led by JPMorgan, and also pay Mr. Neumann a $185 million consulting fee, the people said.

The We Co.'s IPO is now postponed after the company announced it would withdraw its request to go public. Here's a look at the company's business model and why some investors were eyeing the risk. Photo: David 'Dee' Delgado/Bloomberg

Mr. Neumann, who is still chairman of We Co., as the parent is known, is also expected to step down from the board, the people said. He will maintain a stake in the company and remain a board observer.

The nearly $1 billion share purchase is part of a tender offer of as much as $3 billion from SoftBank to be extended to the company’s employees and other investors.

WeWork’s board is expected to announce this deal Tuesday, though the people warned it could be delayed.

(More to come)

More on WeWork

• How Adam Neumann’s Over-the-Top Style Built WeWork. ‘This Is Not the Way Everybody Behaves.’
• WeWork Founder Mixed Spiritual Group With Business
• WeWork Founder Adam Neumann’s Trove of Pricey Properties
• SoftBank Seeking to Take Control of WeWork Through Financing Package
• WeWork Co-Founder Has Cashed Out at Least $700 Million Via Sales, Loans
• WeWork Investors Turned Off by ‘Sloppy’ IPO Filings
• WeWork Still Needs Cash After Pulling IPO
• WeWork Faces Rising Lease Costs After Failed IPO

Write to Maureen Farrell at maureen.farrell@wsj.com

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https://www.wsj.com/articles/softbank-to-take-control-of-wework-11571746483

2019-10-22 12:38:00Z
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