Published 15:12 IST, October 23rd 2019
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 with the exit of its co-founder Neumann from the board
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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.
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.
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.
READ: WeWork Directors Unhappy With CEO Adam Neumann; Seek To Remove Him
(With inputs from agencies)
13:49 IST, October 23rd 2019