The board of office space-sharing company WeWork has accepted a takeover plan proposed by Softbank Group, handing control to the Japanese firm, according to “people familiar with the matter”.
WeWork owner The We Company’s board was evaluating SoftBank’s offer against an alternative financing proposal from JPMorgan Chase & Co, but decided to go with SoftBank, even though the bank put together a $5bn debt financing package.
This marks a stunning reversal of fortunes for WeWork, which has lost nearly $39bn of its valuation over the past five weeks, during which it scrapped its hotly anticipated public debut, removed cofounder Adam Neumann as CEO and launched a cost-cutting plan after starting to run out of cash.
Reuters news agency reported on Monday that SoftBank had offered a package worth nearly $10bn to WeWork and its shareholders under a plan that would keep the company afloat and lead to the exit of chairman Neumann.
SoftBank has offered $5bn in new money to WeWork in the form of debt, and has also proposed to accelerate a previous $1.5bn equity commitment in the form of warrants due in April.
That commitment was made in January at a $47bn valuation, but SoftBank’s latest rescue package is at a valuation of about $8bn, according to the unnamed sources.
The Wall Street Journal reported on Tuesday that under the deal agreed with the board, Neumann would be paid nearly $1.7bn by SoftBank, funded by a new credit line and the sale of roughly $1bn of his WeWork stock.
SoftBank and its $100bn Vision Fund already own about a third of WeWork through previous investments totaling $10.6bn.
WeWork did not immediately respond to request for comment.
The company abandoned its initial public offering in September when investors questioned its large losses, the sustainability of its business model and the way it was being run by Neumann, who gave up his CEO title last month.