Adam Neumann was able to extract nearly $ 500 million in cash from his shares in WeWork and emerge with a stake in a public company, less than 18 months after his initial public offering failed, cost him his job as CEO.
SoftBank is in advanced talks with the co-founder of WeWork and other shareholders to settle a bitter legal battle following the Japanese group’s rescue of the office group in October 2019, which was necessary to help prevent bankruptcy following the collapse of the IPO. said with the negotiations.
The clearance of the lawsuit by Neumann and a special committee of the group’s independent directors would pave the way for the acquisition of WeWork by a special purpose acquisition company, which would give the public listing it is trying to get in 2019. got it.
People familiar with the matter said BowX Acquisition, an empty check vehicle that generated $ 420 million in stock market in August, approached SoftBank, WeWork’s largest shareholder, over a deal that cost WeWork about $ 10 billion dollar can appreciate.
$ 47 billion
The price label SoftBank placed WeWork ahead of the failed exchange in its last private financing round
The talks between the two groups continue and an agreement can be reached in the coming weeks, although the negotiations may still fall apart. The resolution of the legal battle with Neumann and others is seen as critical to the completion of a merger with BowX, as the new public company must attract investors to its shares.
The valuation will be well below the $ 47 billion price that SoftBank placed on the company in its last private financing round before the failed stock exchange, which Neumann and his Wall Street bankers once hoped would reach or obscure the level. .
But that would be an unexpected setback in Neumann’s fate, an endorsement of a business model that was jeopardized as the Covid-19 pandemic emptied offices and another indication of how the Spac boom changed capital markets.
SoftBank is said to have approached Neumann and the special committee over the past two weeks with a proposal to settle their dispute over a $ 3 billion tender offer that was part of the rescue in October 2019. The Japanese group has signed the agreement withdrew to buy the share of Neumann and other investors and said the terms of the agreement were not met.
The opposing parties would have to appear in court next week over the tender offer after an earlier hearing gave the special committee and Neumann the right to pursue their case against SoftBank.
The settlement under discussion will result in SoftBank paying $ 1.5 billion – half the amount disputed – to Neumann and other investors, including Benchmark Capital. Neumann would receive about $ 480 million for 25 percent of his holdings, rather than double the amount for the 50 percent he could offer. He would also retain three-quarters of his current stake in the public company.
WeWork has laid off staff members and left more than 100 open and planned places since the fates drastically changed last year. Led by CEO Sandeep Mathrani, the company has reduced costs dramatically, although it is still losing money.
The talks continue and the exact amount Neumann and others receive may change.
BowX is led by Vivek Ranadivé and Murray Rode, two former executives of Tibco Software and supported by Bow Capital, the venture capital fund founded by Ranadivé with support from the University of California. In the list of documents last year it is said that they intend to investigate telecommunications, media and technology enterprises.
Ranadivé also owns the Sacramento Kings basketball team.
The Wall Street Journal reported earlier on the settlement talks.