WeWork announces SoftBank deal, Adam Neumann to become board observer

WeWork announces SoftBank deal, Adam Neumann to become board observer

SoftBank Group Corp. and WeWork’s parent organization The We Company announced an agreement under which SoftBank commits to provide significant funding to WeWork.

The agreement includes $5 billion in new financing and the launching of a tender offer by SoftBank of up to $3 billion for existing shareholders. Additionally, SoftBank will be accelerating an existing commitment to fund $1.5 billion.

”After closing, and following the tender offer, SoftBank’s fully diluted economic ownership of WeWork will be approximately 80 percent. Since SoftBank will not hold a majority of voting rights at any general stockholder meeting or board of directors (“Board”) meeting and does not control the Company, WeWork will not be a subsidiary of SoftBank. WeWork will be an associate of SoftBank,” said in a statement.

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“SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work. WeWork is at the forefront of this revolution. It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced. Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support. We remain committed to WeWork, its employees, its member customers and landlords,” said Masayoshi Son, Chairman & CEO of SoftBank Group Corp.

In connection with the agreement, WeWork’s Board will appoint Marcelo Claure, Chief Operating Officer of SoftBank Group Corp., to the position of Executive Chairman of the Board of Directors of WeWork, effective upon closing of the accelerated $1.5 billion payment commitment.

Co-Founder Adam Neumann will become ”a Board observer.”

Adam Neumann, the founder of the Company, will become a Board observer. ”The size of the Board will be expanded and it will receive voting control over Mr. Neumann’s shares.” said the company.

READ ALSO : WeWork’s co-founder Adam Neumann steps down as CEO

“The new capital SoftBank is providing will restore momentum to the company and I am committed to delivering profitability and positive free cash flow. As important as the financial implications, this investment demonstrates our confidence in WeWork and its ability to continue to lead in disrupting the commercial real estate market by delivering flexible, collaborative and productive work environments to our customers. I look forward to helping WeWork realize its vision for the benefit of WeWork employees, members, landlords and communities worldwide,” said Marcelo Claure.

“This financing provides WeWork with the capital to fully realize its objective of being the partner of choice to our members and landlords, while at the same time providing a platform for growth and capital returns for shareholders and employees. We will have the flexibility to continue streamlining our assets and stabilizing the business without sacrificing our global brand and exceptional products. Narrowing our strategic focus to our core WeWork desk business will ensure we continue to provide our members with a great day at work, every day. We are fortunate to have a deep bench of experienced colleagues around the world who will help us lead in the market going forward,” said Artie Minson and Sebastian Gunningham, co-CEOs of WeWork.