WeWork co-Founder threatens to sue after SoftBank pulled out rescue deal

WeWork’s founder and former Chief Executive, Adam Neumann, has threatened to sue SoftBank, the office space company’s biggest investor, after it pulled out of a deal to buy $3bn (£2.4bn) of WeWork shares – including almost $1bn from Neumann himself.

SoftBank, which is run by the Japanese billionaire Masayoshi Son, announced on Thursday it was terminating a $3bn share tender rescue deal hammered out last October to save WeWork from collapse.

SoftBank said it had “no choice” but to scrap the rescue deal because WeWork had failed to meet several conditions. It also cited concerns about “multiple, new, and significant pending criminal and civil investigations”. The Japanese conglomerate said it remained “fully committed to the success of WeWork” but “several of those conditions were not met, leaving SoftBank no choice but to terminate the tender offer”.

The deal would have mostly benefited Neumann, who was lined up to sell $970m worth of shares even as thousands of WeWork employees were laid off with very little compensation.

“Adam Neumann, his family, and certain large institutional stockholders, such as Benchmark Capital, were the parties who stood to benefit most from the tender offer,” SoftBank said. “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.”

A special committee of WeWork’s board said it was disappointed that SoftBank had pulled out of the deal and it was considering “all of its legal options, including litigation”.

The deal was hastily arranged in October 2019 as part of SoftBank’s rescue of the office-space provider after its planned flotation on the stock market was scrapped. WeWork had repeatedly cut the price of the IPO as investors balked at its initial valuation of up to $65bn. Neumann could have made a potential $14.3bn paper fortune if the company had floated at the top end of estimates.