SoftBank won’t buy $3 billion in WeWork stock

  • SoftBank won’t buy $3 billion in WeWork stock

SoftBank won’t buy $3 billion in WeWork stock

The company said "certain conditions to the tender offer were not satisfied", but added the decision would have "no impact on WeWork's operations, customers, five-year business and strategic plan, or the vast majority of WeWork's current employees".

SoftBank Group has officially pulled out of its deal to buy $3 billion worth of shares in WeWork from stockholders. "The Special Committee will evaluate all of its legal options, including litigation".

Though the company reported a loss of $1.25 billion in the third quarter a year ago, WeWork last week revealed that it expects to be able to overcome the economic slowdown thanks to a war chest of $4.4 billion in cash and cash commitments.

SoftBank cited the existence of "multiple, new, and significant pending criminal and civil investigations" surrounding WeWork and its co-founder Adam Neumann.

Following the termination of the deal, SoftBank shares closed up 2.5%, outperforming a 1.4% decline for the broader Tokyo market.

SoftBank said it had expected to report a loss connected to the share purchase because the price it was planning to pay was greater than the shares' fair value. In the deal, the Japanese conglomerate would have taken a stake of nearly 80 per cent in the company and bought US$3 billion in shares from investors as well as current and former employees.

Mr Neumann, ousted in the deal, was set to sell up to $970 million in shares. In a letter to bondholders, the company warned it didn't expect to hit its financial targets for 2020. The Japanese conglomerate said it had "no choice" but to scrap the agreement because the co-working giant had failed to meet several conditions by April 1, including not getting antitrust approvals or closing joint ventures in Asia.

In the past few weeks, the shareholder buyout deal has become increasingly contentious.

The decision was yet another dramatic turn of events at troubled WeWork, once hailed as a shining unicorn valued at $47 billion. "Its excuses for not trying to close are inappropriate and dishonest", a spokeswoman for the directors had said in a statement.

A source first told Yahoo Finance that Softbank would not follow through with the bailout, which was designed late previous year to help the struggling office space startup. SoftBank stepped in with a rescue package of $10 billion while taking away 80% ownership of the company, an action which also resulted in Neumann leaving the company.

Since October 2019, SoftBank and the SoftBank Vision Fund have committed more than $14.25 billion to WeWork to date, including $5.45 billion.