SoftBank backs out of $3b WeWork tender offer

SoftBank is abandoning its commitment to spend US$3 billion to acquire WeWork stock from the co-working operator’s former CEO Adam Neumann and other shareholders.

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In an emailed statement to Japan Times, the special committee of WeWork’s board said that they have been told by SoftBank that it will not be moving forward with the tender offer agreed upon back in October last year. The committee noted that they will remain committed to reaching a resolution.

“The special committee will evaluate all of its legal options, including litigation,” they added.

WeWork declined to comment further on the matter.

Last month, WeWork shareholders received a letter saying the investment giant may not complete its tender offer, which is part of its rescue package for the embattled startup, partly due to regulatory probes by the Securities and Exchange Commission and the Justice Department.

In response, the special committee said March 22 that they may take necessary actions to ensure that the tender offer stands.

“Not only is SoftBank obligated to consummate the tender offer […] but its excuses for not trying to close are inappropriate and dishonest,” the company said. SoftBank’s cancellation would also be “completely unethical,” WeWork said, given the current economic environment affected by Covid-19.

SoftBank promised the tender offer as part of its US$9.5 billion bailout program for the co-working space provider, which came after the startup’s failed IPO attempt. It also includes a US$1.5 billion injection from the Japanese conglomerate and US$5 billion in debt financing.

With the US$3 billion deal, SoftBank was expected to take about 80% of WeWork’s stake. Neumann was set to sell up to US$970 million of his shares, with VC firm Benchmark looking to let go of about US$600 million in shares.