WeWork welcomes SoftBank rescue plan valuing the startup at $8 billion

Japanese multinational conglomerate SoftBank is about to take the control of WeWork as a rescue plan. The take-over will witness the exit of its co-founder Adam Neumann from the board. The information was confirmed by a source to a news agency on October 22 after WeWork accepted SoftBank's bailout plan. SoftBank already holds 29% of WeWork and is about to invest a minimum of $5 billion extra which will give it total authority over the firm, said the source.  Neumann, who is about to step down from the board of directors will get about $1.7 billion. SoftBank will own around 80% of WeWork company. WeWork is an American commercial real estate firm that provides shared workspaces for offices. 

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WeWork will value at $8 billion after deal

According to the deal, WeWork will value at $8 billion. The amount is far from the $47 billion at the beginning of the year. WeWork also relied on a bailout plan by JPMorgan Chase, a major external shareholder of WeWork. However, no company could match SoftBank's offer. The New York-headquartered firm has thousands of employees who could lose their jobs. The agreement will provide the required funds WeWork at present needs. Even though SoftBank will own a major portion of the company, it won't hold the majority of voting rights at any stockholder or board of directors meeting. As per the deal, Newmann will reportedly become a board observer and the chief operating officer of SoftBank Group and Marcelo Claure will take up the post of executive chairman of the board of directors at WeWork.

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Neumann will continue having a small stake

In September 2019, Neumann resigned from his position as the chief executive of WeWork. The resignation came after questions were raised over self-dealing between his private assets and the company. Neumann will still continue to have a small stake in the firm. SoftBank, as per the deal will pay Neumann $1 billion for his shares, $185 million as a consulting fee and $500 million in credit, as per the news agency. In September, WeWork cancelled a plan to go public amid questions raised on its long-term profitability prospects. Last year, the firm had reported a loss of over $1.9 billion. 
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(With inputs from agencies)