SoftBank to take control of WeWork at an $8b valuation, sources say

SoftBank is reportedly in advanced talks to own at least 70% of WeWork with a US$4 billion to US$5 billion injection into the co-working company.

The deal, which could be announced today, is set to value WeWork between US$7.5 billion and US$8 billion on a pre-funding basis, according to a CNBC report that cited people familiar with the development.

Photo credit: Eloise Ambursley

With the injection, SoftBank hopes WeWork would become free cash flow positive and profitable more quickly, according to the sources.

The Japanese conglomerate, which had already invested more than US$10 billion in the workspace-sharing firm, will be making up to a US$3 billion tender offer along with a committed US$1.5 billion acceleration of equity and US$5 million in syndicated debt, two sources said. Part of the new funding will be done through debt financing involving warrants that were expiring, they added.

According to the report, the new investment in WeWork will result in former CEO Adam Neumann’s stake falling to low double digits. Neumann stepped down as CEO of the company last month.

Marcelo Claure, chief operating officer of SoftBank Group and CEO of SoftBank Group International, is set to be involved in the company’s management, likely as chairman, the sources said.

Last week, it was reported that SoftBank was in talks to provide WeWork with about US$5 billion of rescue financing. The funds will come directly from SoftBank, rather than its Vision Fund.

WeWork shelved its plans to go public last month and has been focused on acquiring new capital. It was reportedly looking to slash its workforce and slow down its expansion to reduce expenses.