The Japanese multinational conglomerate SoftBank steps back to complete its tender offer of $3 billion, which it had promised to WeWork as a multibillion-dollar rescue package for the startup, the Wall Street Journal reported.
According to the agreement made in 2019, SoftBank had planned a cash crunch of $9.5 billion bailout program for WeWork. The plan comprises $1.5 billion that has already committed by SoftBank, a $3 billion tender offer, which is likely to be canceled, and $5 billion debt financing. However, the back out would not affect the $5 billion syndicate funds, as per reports.
The offer by SoftBank ends on 1st April. As part of the deal, SoftBank had a plan to exchange share for WeWork’s joint ventures, which were expected to close on April 1, but they havn’t yet. SoftBank took it very seriously, therefore, they wrote to WeWork shareholders on Tuesday stating their inability to finish the tender offer, mentioning potential issues from the Securities and Exchange Commission and the Justice Department. Alongside this, WeWork’s former founder Adam Neumann, who stepped down as the WeWork’s CEO in 2019, sold $970 million of his stock to SoftBank and post-deal SoftBank was expected to own 80% of WeWork.
In early 2019, WeWork was valued at $47 billion, whereas after SoftBank’s valuation of WeWork was fallen to $8 billion, considering $47 billion as absurd valuation. Thus, SoftBank founder Masayoshi Son lost faith in Adam, and Japanese technology suspended its plans to go public. Recently, Son said that trusting WeWork founder Adam with over $10 billion investment was like barking up the wrong tree.
The market has been severely affected as millions of white-collar employees switched to work from home, the global economic slowdown due to the outbreak of COVID-19. The deal to rebuying WeWork’s shares is reportedly not canceled. However, it could renegotiation the terms after the closure of continuing remote work policies once this global crisis is curbed.
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