WeWork humbled as SoftBank poised to takeover at $8bn valuation
The biggest shareholder of troubled office company WeWork is poised to takeover the company in a deal that values it at $8bn, according to multiple reports.
The Financial Times and CNBC reported that WeWork's board are expected to accept the $9.5bn funding package at a board meeting on Tuesday. The deal would give SoftBank as much as 70% control of the company.
WeWork declined to comment. SoftBank did not immediately respond to a request for comment.READ MORE: Top WeWork buildings pay no UK tax despite profits of £10m
If confirmed, the rescue deal would represent an embarrassing retreat for both parties.
WeWork tried to list on the stock market last month at a proposed valuation of $47bn but was forced to pull its initial public offering (IPO) after lack of investor interest. The collapse of the IPO has left the company facing a cash crunch.
SoftBank is WeWork's largest investor and has already invested around $11bn in the company. SoftBank, which currently owns about a third of WeWork, once said WeWork could someday be worth $100bn. Estimates suggest WeWork needs to sell or float for at least $24bn in order to avoid a loss on its investment.
The proposed SoftBank bailout would radically cut the voting power of WeWork founder Adam Neumann, according to the Financial Times. Neumann, a controversial figure due to his hard partying style, once held special shares that gave him 20 times the voting power of ordinary investors. After the SoftBank deal, he would have a voting stake of just under 10%.READ MORE: WeWork delays multi-billion-dollar IPO after poor reception
WeWork rents space in office buildings on long leases and then offers flexible, short-term subleases to startups. It business model requires consistent strong cashflow to meet rental payments. Filings last week showed that just three London buildings were committed to over £250m in long-term lease payments.
Founded in 2010 in New York, WeWork has raised billions from investors and has over 500 locations globally. Investors looking at WeWork's IPO were turned off by the company's huge losses and some questioned whether it could ever make money. The We Company, WeWork's parent, lost $900m on revenues of $1.5bn in the first six months of the year.
Adam Neumann, the flamboyant co-founder and ex-chief executive of WeWork, could be stripped of his outsize voting power and chairmanship of the money-losing property company under a $9.5-billion rescue proposal from its largest investor, SoftBank,
Adam Neumann, the flamboyant co-founder of WeWork, will be stripped of his outsize voting power and chairmanship of the lossmaking property company, under a $9.5bn rescue proposal from its largest investor, SoftBank, set to be
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