Adam Neumann has agreed to a 50 per cent reduction in the payout he will receive from WeWork’s largest investor SoftBank, ending a legal battle and paving the way for the public office provider.
SoftBank said on Friday it had reached a settlement agreement with Neumann and two WeWork board directors, which sued SoftBank over the reluctance of the Japanese group to execute a $ 3 billion tender offer it promised as part of ‘ a rescue package for the company.
The deal comes 18 months after a well-rounded initial public offering that brought WeWork to the brink of bankruptcy, after a series of sincere mistakes that led to Neumann’s resignation as CEO.
Under the deal, SoftBank would spend $ 1.5 billion to buy shares of Neumann, WeWork employees and other investors in the company, including venture group Benchmark Capital, according to people informed about it. Neumann could sell up to $ 500 million in the deal.
SoftBank initially planned to purchase double the amount as part of a $ 1 million bailout package in October 2019, but later abandoned the tender offer, claiming WeWork did not meet a number of conditions behind the bailout agreement.
Marcelo Claure, executive chairman of WeWork, said the settlement was “due to the fact that all parties came to the table to do what is best for the future of WeWork”.
Resolving the dispute with Neumann was critical to potentially merging WeWork with a listed blank check business that would allow it to trade on public markets, a person with direct knowledge of it said.
SoftBank is currently in talks with BowX Acquisition, a special acquisitions company that raised $ 420 million in an IPO in August over a merger that WeWork could value between $ 8 billion and $ 10 billion, saying people are familiar with the case.
The talks have been active for several weeks and an agreement could be announced soon, although one person involved in the negotiations said WeWork could still decide to go public through a traditional exchange or a direct listing. go.
The new valuation is far from the $ 47 billion WeWork mark in a round of financing he secured before the company received criticism from investors over the huge losses, management issues and revelations that Neumann personally benefits from a series of transactions.
Neumann will not play a role in the management of WeWork, nor will he sit on the board of the company, people said, the settlement has been informed. However, he would retain most of his stake in the company.