WeWork Sues SoftBank In Intensifying Crisis Over Canceled $3 Billion Tender Offer

Just days after SoftBank announced that it would not consummate its $3 billion tender offer for WeWork shares that would have bought out some of the equity held by the company's co-founder Adam Neumann along with venture capital firms like Benchmark and many individual company employees, the company is now retaliating, suing SoftBank over alleged breach of contract and breach of fiduciary duty. TechCrunch reports: In a press statement this morning, the Special Committee of WeWork's board said that it "regrets the fact that SoftBank continues to put its own interests ahead of those of WeWork's minority stockholders." WeWork's Special Committee argues that SoftBank already received the benefits of the contract it signed last year, which included board control provisions. It's demanding that SoftBank either complete the transaction, or offer cash to cover damages related to its scuttling of the deal. Under the terms of the tender offer proposed in November last year, SoftBank would buy upwards of $3 billion in shares from existing shareholders with the transaction closing at the beginning of April. As part of the terms of that contract, the co-working company and SoftBank agreed to a set of performance milestones that WeWork agreed to meet in exchange for the secondary liquidity. Such terms are customary in most financial transactions.

SoftBank in its statement last week said that WeWork failed to meet a number of those performance requirements, and said that it was within its rights under the tender offer contract to walk away from the deal. WeWork's financials have been rocked by the global pandemic of novel coronavirus, which has seen the company's co-working facilities mostly closed worldwide as part of public health mandates for social distancing. Given the disagreement between the parties, a lawsuit was all but inevitable.

What?

[fred911]

"l. WeWork's financials have been rocked by the global pandemic of novel coronavirus"

Uh.. they were "rocked" long before that. Starting with limiting the open tap and finishing when they removed the keg.

This may sound like a drunkard's response but it's amazingly inline with their production and earnings. Take a look. Seriously what did they offer more than Regus.. Beer (and neckbeards).

Re:

[gosso920]

There's not enough lipstick in the world to put on this pig of a company.

Fiduciary Doody

[Anonymous Coward]

Well obviously, not shovelling massive amounts of money into the pockets of (((Adam Neumann))) is a clear breach of fiduciary doody.

Bye WeDontWork

[Way Smarter Than You]

Their space I saw in San Francisco looked like a Hollywood fantasy version of what real startups look like. Is anyone aware of any real company that spent any real time at a WeWork office? Kitchen table, dorm room, apartment floor, the HP garage, lots of make do places. All are free. Who ever launched from WeWork?

As far as lawsuits go, tough shit. Their business model was already crap and now with social distancing, it is dead as dead can be. Deader than dead. And no pity for the unethical CEO/founde

Re:

[account_deleted]

Comment removed based on user account deletion

Our benevolent dictator meant well

[thesjaakspoiler]

His greatness and galaxial vision about 'We' would have brought affordable offices and world peace on this planet.

Re:

[rtb61]

It's still funny when they sue based on the delusions of their ego. All Softbank has to prove is Wework overstated the potential revenue and real worth and expose what the real money making plan was about, data mining small and medium business on Wework's controlled computer access that those businesses used to access the internet. All the early proprietary secrets early in a business, picking the winners and stealing the ideas and wham privacy laws appeared and that plan collapsed. Done globally tens of bi

It's all in the name

[Quakeulf]

Neumann tried to bait but the fish isn't biting. He will not stop until he's either electrocuted, hanged, subjected to a firing squad, or injected with lethal gas. It's in his genes to scam until he dies.

bite the hand....

[hdyoung]

Wow. Talk about biting the hand that fed you, LONG after you deserved to be fed at all. WeWork is an old-fashioned, old-school landlord-type business dressed up in Internet 4.0 clothing. WeWork business prospects were never anything close to the hype. Softbank had a pot of money to invest that was so stupidly large that they ran out of good ideas to invest in, so they fed funding to outfits like WeWork on the outside chance that they become the next Amazon.

And now they're suing Softbank? That's their b

Re:bite the hand....

[fred911]

"No, I'm not shorting WeWork stock. I'm not dumb enough to think that I can outsmart the market."

Umm..Considering JPMorgan backed out, the CEO cashed some $700 million before the offering and it was NEVER OFFERED to the public, surely they'd be more than happy to sell you private shares for your greenbacks (if they're tall enough).

PS.. you can't short a privately owned company.

Re:

[hdyoung]

haha. My bad on that one. Didn't do my homework to realize they were still private.

Glad to hear that the individual investors won't lose their shirts.

Re:

[gwills]

Lol, you don't seem to understand how shorting works, what kind of IQ does that require? Stock picking, is not gambling. Although most are bad at it, and some do gamble on the markets. Other than that, I agree with you that WeWork is a joke. We've truly hit peak, late-capitalism when a shitty business model like this get the kind of attention and cash 10 real startups could have used to launch.

Of course

[phantomfive]

"regrets the fact that SoftBank continues to put its own interests ahead of those of WeWork's minority stockholders."

It even says in their name Bank, whose interests exactly did you expect them to put ahead of their own? That's naive even by corporate PR standards.

Re:

[Swistak]

Softbank is not a Bank :D It's an investment company (think Sequoia), that is also one of three biggest telecomunications operators in Japan.
Son got insanely lucky by investing in Alibaba, and he thought that's his skill.

Detrimental reliance

[spinitch]

DePends on the covenants in agreement but WeWork did pass on other investors accepting SB bid. If SB had escape clauses clearly outlined and those conditions present, then WeWorked might be outworked. SB will still be biggest loser as they sunk the most into the risky venture. Lawyers will be main winners in this battle. SB did get control and if they obstructed even inadvertently meeting terms then could be an interesting dilemma. one of the wackiest businesses cases still with more drama as the ponzi e