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All the details of SoftBank’s WeWork takeover: SoftBank will own 80% of WeWork, Neumann steps down, and SoftBank invests billions. The new chairman will address employees on Wednesday.
SoftBank announced a deal to take over WeWork on Tuesday night. The rescue plan, which comes weeks before WeWork was set to run out of money, includes a capital infusion and stock buyback from the Japanese investor. Marcelo Claure, SoftBank’s chief operating officer, will become executive chairman of WeWork’s board. Two sources told Business Insider Claure addressing the company at an all-staff meeting on Wednesday morning. For more WeWork stories, click here. SoftBank formally announced a plan to rescue WeWork on Tuesday. The deal ends a tumultuous 10 weeks for the office company – which filed in mid-August for an initial public offering that was ultimately shelved – and its largest investor. The plan sees SoftBank invest $5 billion in new financing, buy back up to $3 billion of stock, and accelerate a planned $1.5 billion investment. The Japanese investor will own about 80% of WeWork after the deal closes. Because SoftBank won’t hold a majority of voting rights, WeWork will be a SoftBank associate instead of a subsidiary. “It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced. Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support,” SoftBank CEO Masayoshi Son said in the Tuesday statement. Marcelo Claure, SoftBank’s chief operating officer, will take Neumann’s position as chairman, and the board that will add more members. The controversial cofounder will become a board observer, which means he won’t have voting rights. Three sources told Business Insider that Claure would address WeWork staff at an all-company meeting on Wednesday morning. Earlier on Tuesday, employees told Business Insider they were outraged about SoftBank’s deal and the lack of communication about their jobs after headlines about major layoffs. “The funding provides WeWork with significant liquidity to execute its business plan to accelerate the Company’s path to profitability and positive free cash flow,” the company said in the Tuesday statement, which did not mention job cuts. See more: Sex, tequila, and a tiger: Employees inside Adam Neumann’s WeWork talk about the nonstop party to attain a $100 billion dream and the messy reality that tanked it The Wall Street Journal reported earlier in the day that SoftBank would provide Neumann with almost $1.7 billion. SoftBank’s Tuesday statement did not specify details on his exit package. The Journal reported that Neumann would have the option to sell nearly $1 billion of stock to SoftBank, step down as board chairman, and receive a $185 million consulting fee as well as a $500 million credit line, The Journal said. A representative for Neumann did not respond to request for comment. Read more: Leaked video reveals Adam Neumann told staff earlier this year that his family had 100% control of WeWork and that even in 300 years his descendants would be in control WeWork earlier this year was in talks to borrow $6 billion from banks, a deal contingent on raising at least $3 billion in a public float. But after the company released its initial-public-offering filing in mid-August, investors, analysts, and the media highlighted problems with its business model, conflicts of interest, and leadership. Six weeks later, WeWork’s board of directors ousted the controversial Neumann as CEO and replaced him with two co-CEOs, who shelved the IPO indefinitely.Read more: Sex, tequila, and a tiger: Employees inside Adam Neumann’s WeWork talk about the nonstop party to attain a $100 billion dream and the messy reality that tanked it Co-CEOs’ first weeks in office After taking the co-CEO role on September 24, Artie Minson and Sebastian Gunningham immediately turned their attention to rescuing WeWork. They looked to sell some of WeWork’s acquisitions and the company’s corporate jet; lay off up to a quarter of the company’s workforce; wind down noncore businesses like WeGrow, its educational arm; remove members of Neumann’s inner circle; and line up billions in funding. WeWork’s seven-member board tapped the directors Bruce Dunlevie and Lew Frankfort to form a two-man committee to evaluate the plans from SoftBank and JPMorgan, Reuters reported. Dunlevie is a general partner at the WeWork investor Benchmark Capital, while Frankfort was the CEO of the handbag company Coach.Read more: Inside WeWork’s troubled $850 million Lord & Taylor building: A tale of outsize ambition, audacious renovations, and now financial worriesGot a tip? Contact Meghan Morris on Signal at (646) 768-1627 using a nonwork phone, Twitter DM @MeghanEMorris, or email at firstname.lastname@example.org. (PR pitches by email only, please.) The post All the details of SoftBank’s WeWork takeover: SoftBank will own 80% of WeWork, Neumann steps down, and SoftBank invests billions. The new chairman will address employees on Wednesday. appeared first on Business Insider Nederland.
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