Thursday, July 9, 2020
Home News Markets SoftBank Backs out of $3 billion WeWork Stock Purchase

SoftBank Backs out of $3 billion WeWork Stock Purchase

-

Despite threats of legal action, global tech investor SoftBank recently announced they were no longer going to ahead with their deal to purchase WeWork stock. The deal, which was reached last year, had SoftBank buying $3 billion worth of shares from former CEO Adam Neumann, employees, and other investors as part of a bailout package. WeWork business centers around creating communal work spaces; signing long-term leases with landlords around the world and then renting that space out to smaller companies and freelance workers. 

When SoftBank confirmed its intention to abandon the deal, the company was said to have cited multiple conditions they were not satisfied with; having even informed stockholders that conditions for the deal had yet to be made in mid-march. One condition being the release of financial and operational information from US criminal and civil investigations related to Neumann. Neumann, WeWorks founder, had quit the company last year, and has arguably lost the most from the deals termination. It’s reported Neumann owns about half of the shares that were up for the offer; worth close to $1 billion. 

And though SoftBank will not be purchasing $3 billion worth of stocks, they’ve announced its bailout of WeWork would go ahead. 

“SoftBank remains fully committed to the success of WeWork and has taken significant steps to strengthen the company since October, including newly committed capital, the development of a new strategic plan for WeWork and the hiring of a new, world-class management team,” said Rob Townsend, chief legal officer at the company. “The tender offer was an offer to buy shares directly from other major stockholders and its termination has no impact on WeWork’s operations or customers.”

WeWork, which was once valued at ~$47 billion, has struggled to find its footing in these last few years. From the company’s massive losses, high costs, and its failed IPO launch, WeWork’s only hope has been SoftBank. And its looking like they will have to continue to rely on SoftBank’s continued interest/investment should they hope to stay afloat. Because of the coronavirus the company announced it does not expect to hit its 2020 financial targets. 

Alex Took
Alex is a staff writer for Financial News where he focuses primarily on politics, business, and government.

Crypto Prices

Twittersphere