SoftBank eyes control of WeWork through finance package worth billions

Over the last few months the startups backed by Masayoshi Son have had a rough time, from WeWork’s messed up IPO to a considerable decline in Uber shares. Analysts had estimated that the damage for SoftBank could reach into billions of dollars.

However, WeWork’s financial crisis could lead to an acquisition by its largest investor at a valuation below $10 billion.

Masayoshi Son’s SoftBank recently announced that it has managed to put together a bid to take control of American commercial real estate firm WeWork. SoftBank currently owns one-third of the company and is apparently planning to invest a few billion dollars in additional equity and debt in WeWork.

Seemingly, this move would considerably increase SoftBank’s stake in WeWork and further diminish co-founder Adam Neumann’s influence on the company. This would seemingly offer the Japanese conglomerate a huge opportunity to turn around WeWork’s operations.

However, sources familiar with the matter reported that the situation is quite fluid and there is no guarantee yet that a deal will be reached.

Following the collapse of WeWork’s planned initial public offering last month, Neumann had reportedly confirmed he would stepped down as CEO. It seems that the company was planning to raise several billion dollars in debt through its public offering to finance its continued operations.

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It has also come to the fore through reliable sources that during the same period, Neumann had agreed to dilute his voting power to 3:1 from 10:1, apparently indicating that he was willing to give up majority control over WeWork’s operations.

With nearly 115 million shares, Neumann was evidently the largest individual stakeholder in the firm. However, experts claim that SoftBank CEO Masayoshi Son, who had spent billions of dollars on the startup, lead the charge to remove Newmann as CEO.

Following the events, insiders Sebastian Gunningham and Artie Minson evidently took over business operations as joint CEOs.

Analysts report that the Japanese conglomerate had invested close to $2 billion in WeWork in January at a valuation of about $47 billion. WeWork’s failed IPO would have forced SoftBank to write down the investment, with operating profit dropping 15% if the IPO had been valued at $20 billion.

 

Source credits: https://www.cnbc.com/2019/10/13/softbank-is-seeking-to-take-control-of-wework-wsj.html