Japan’s SoftBank Group has walked away from a $3 bn tender offer for WeWork shares citing closing conditions not being met by the April 1 deadline.
In a statement issued today, SoftBank’s SVP and chief legal officer, Rob Townsend, said: ‘SoftBank remains fully committed to the success of WeWork and has taken significant steps to strengthen the company since October, including newly committed capital, the development of a new strategic plan for WeWork and the hiring of a new, world-class management team. The tender offer closing was conditioned on the satisfaction of certain closing conditions the parties agreed to in October of last year for SoftBank’s protection. Several of those conditions were not met, leaving SoftBank no choice but to terminate the tender offer.’
Townsend continued, ‘Given our fiduciary duty to our shareholders, it would be irresponsible of SoftBank to ignore the fact that the conditions were not satisfied and to nevertheless consummate the tender offer.’
The Japanese telecoms giant had agreed last October to a multi-billion dollar rescue deal, which would give it control of around 80% of the troubled co-working firm. Under the deal, Softbank would provide new financing and also launch a tender offer of up to $3 bn for existing shareholders, including WeWork founder Adam Neumann who was to receive almost $1 bn for his shares.
In the press statement, Softbank highlighted that Adam Neumann, his family, and certain large institutional stockholders, such as Benchmark Capital, were the parties who stood to benefit most from the tender offer. Together, Neumann’s and Benchmark’s equity constitute more than half of the stock tendered in the offering. In contrast, current WeWork employees tendered less than 10% of the total, it said.
SoftBank lists the unfulfilled conditions that have led it to terminate the offer as:
• The failure to obtain the necessary antitrust approvals by April 1, 2020;
• The failure to sign and close the roll up of the China joint venture by April 1, 2020;
• The failure to close the roll up of the Asia (ex-China and ex-Japan) joint venture by April 1, 2020;
• The existence of multiple, new, and significant pending criminal and civil investigations that have begun since the MTA was signed in October 2019, in which authorities have requested information regarding, among other things, WeWork’s financing activities, communications with investors, business dealings with Adam Neumann, operations, and financial condition; and
• The existence of multiple new actions by governments around the world related to Covid -19, imposing restrictions against WeWork and its operations.
Last year the New York-based company, which rents shared office space and helped to popularise co-working, was forced to cancel plans to raise money via a stock market listing after receiving a lukewarm reaction from investors.
With around 500 locations across the world, WeWork lost $1.25 bn in the three months that ended in September, up from $497 mln in the same period a year earlier.