SoftBank to walk out on $3 bn commitment to WeWork

SoftBank had previously agreed to buy shares from former chief executive officer Adam Neumann

In a stunning turn of events in what is already tech's biggest soap opera, SoftBank Group Corp. has terminated an offer to acquire $3 billion in WeWork shares as part of its $8 billion bailout of the troubled workspace provider announced in October. "The Special Committee will evaluate all of its legal options, including litigation", it said in an emailed statement.

Though the company reported a loss of $1.25 billion in the third quarter previous year, 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.

Late previous year, we wrote a story about former WeWork co-founder and CEO Adam Neumann after SoftBank announced it would takeover WeWork.

SoftBank's announcement was received positively in the stock market as it closed 2.5% up on Thursday versus a 1.4% decline that was noted in the wider Tokyo index.N225. The deal's deadline is 11:59pm NY time April 2.

WeWork signs long-term leases with landlords around the world and then rents that space to smaller companies and freelance workers, a business that has been particularly vulnerable to the coronavirus and economic slowdown. In a letter to bondholders, the corporate warned it didn't be expecting to hit its monetary goals for 2020.

Because the deal collapsed, Neumann won't be able to sell as much as $970 million of stock in the co-working company.

"The tender offer closing was conditioned on the satisfaction of certain closing conditions".

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

"Given our fiduciary duty to our shareholders, it would be irresponsible of SoftBank to ignore the fact that the conditions were not satisfied and to nevertheless consummate the tender offer", said Townsend.

The two WeWork independent board directors responded, saying they would consider legal action if SoftBank pulled out. "Its excuses for not trying to close are inappropriate and dishonest", a spokeswoman for the directors had said in a statement.

The newest deal is separate from SoftBank's bailout of WePaintings itself, a package deal that incorporated $5 billion in new financing and the acceleration of an previous $1.5 billion dedication.

His net worth rose to $14 billion previous year before dropping to $1.3 billion at the time of SoftBank's bailout, according to Bloomberg's wealth ranking.



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