SoftBank Group Corp. is taking control of WeWork and providing the office-space startup with billions to keep it operating.
In a press release Tuesday night, SoftBank and WeWork jointly announced the Japanese tech conglomerate will own 80% of WeWork and SoftBank chief operating officer Marcelo Claure will be appointed executive chairman of WeWork’s board of directors.
The funding includes $5 billion in new financing and the launching of a tender offer by SoftBank of up to $3 billion for existing shareholders. SoftBank also will be accelerating an existing commitment to fund $1.5 billion, according to the release.
“As important as the financial implications, this investment demonstrates our confidence in WeWork and its ability to continue to lead in disrupting the commercial real estate market by delivering flexible, collaborative and productive work environments to our customers,” Claure said in the release.
“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 release said. “WeWork will not be a subsidiary of SoftBank. WeWork will be an associate of SoftBank.”
WeWork co-founder Adam Neumann will become a board observer, the release said. The Wall Street Journal reported Tuesday that Neumann could get up to $1.7 billion to exit.
Masayoshi Son, chairman and CEO of SoftBank, said in the release his company decided to “double down” on WeWork with “significant capital infusion and operational support.”
“SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work. WeWork is at the forefront of this revolution,” Son said. “It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced.”
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