The drama at WeWork as SoftBank scraps their $3 billion deal
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SoftBank officially scrapped a deal to buy up to $3 billion in stock from existing WeWork shareholders.
Late last year, the Japanese telecom giant agreed to acquire shares as part of a wider bailout package for office-sharing startup, after the company’s attempt at a debut on the public markets fell flat.
But now, citing its fiduciary duty to its own shareholders, SoftBank says such a deal would be “irresponsible.” In a press release, SoftBank noted WeWork’s ongoing criminal and civil investigations, WeWork’s failure to close a China joint venture, and the impact of coronavirus on a largely physical business.
The deal would have given former CEO and co-founder Adam Neumann nearly $1 billion for his shares alone, even as the company itself laid off thousands of workers. In its most recent release, SoftBank leaned hard into that oft-criticized narrative. The telecom giant pointed to its $14.25 billion investment in WeWork, emphasizing that Neumann “stood to benefit the most from the tender offer.”
“Together, Mr. Neumann’s and Benchmark’s equity constitute more than half of the stock tendered in the offering. In contrast, current WeWork employees tendered less than 10% of the total,” SoftBank’s release read. Benchmark was another investor.
In a statement, Benchmark’s Bruce Dunlevie and former Coach CEO Lew Frankfort, as part of WeWork’s Special Committee of the Board of Directors, said they were “surprised and disappointed” and will “evaluate all of its legal options, including litigation.”
Meanwhile, SoftBank investment partner Kirthiga Reddy sits on WeWork’s board alongside the duo, as does WeWork CEO Marcelo Claure, a SoftBank executive himself.
It’s certainly a blow to Neumann and Benchmark. But does that mean SoftBank will tender a new deal—one that is kinder to employees?
At any rate: Talk about awkward.
The new man at the helm of T-Mobile: SoftBank-backed T-Mobile merged with Sprint on Thursday, putting a new CEO at the helm: Mike Sievert. While his predecessors may be reminiscent of startup land founders (goodbye suits and ties, hello big personalities), Sievert gives off a little more of a “suburban dad vibe,” as my colleague Aaron Pressman put it in an interview with him.
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