SoftBank ready to take control of WeWork with $10 billion proposal

Sources say Japan-based bank’s plan would see co-founder and current chairman of the board Adam Neumann step down

Japan-based SoftBank is ready to buy a controlling stake in WeWork, providing the shared office space startup desperately needed funding at a slashed valuation, according to sources.

In total, the SoftBank takeover plan offered nearly $10 billion to WeWork and its shareholders, Reuters reported Tuesday.

SoftBank is ready to invest $4 billion to $5 billion in WeWork, taking a majority stake in the New York company while valuing it at $8 billion overall, a source told AFP, asking not to be identified.

WeWork — which declined to comment on the issue — had been valued at more than $47 billion earlier this year.

The SoftBank proposal includes offering to buy more than a billion dollars in shares of WeWork from existing investors and employees, among them co-founder Adam Neumann. It will also speed up a previous $1.5 billion equity commitment due in April, according to sources.

Softbank group CEO Masayoshi Son answers a question during a press conference announcing the company’s financial results in Tokyo, August 7, 2019. (Toshifumi KITAMURA/AFP)

SoftBank already owns about a third of WeWork, having previously invested $10.6 billion in the company.

Investment bank JPMorgan Chase, which already has an interest in WeWork, was expected to have an alternative debt financing plan for the startup board of directors to consider at a meeting on Tuesday, according to sources.

WeWork needs to raise at least $3 billion to cover its financing needs through the end of the year, according to sources.

If WeWork opts for the SoftBank offer, the Japanese conglomerate headed by billionaire Masayoshi Son will own more than 80 percent of the startup.

The deal would also limit the influence of former chief executive and co-founder Neumann.

Sources said the plan could see Neumann leave his position as WeWork’s chairman of the board, becoming an adviser instead, Reuters reported. SoftBank Chief Operating Officer Marcelo Claure would take over as chairman instead.

Adam Neumann, co-founder and CEO of WeWork, attends the opening bell ceremony at Nasdaq, in New York, January 16, 2018. (AP Photo/Mark Lennihan, File)

Neumann already stepped down as chief executive in September amid questions over perceived self-dealing between his personal assets and WeWork, and over unconventional personal conduct, including drug use.

The company also scotched a plan to go public for the foreseeable future, ending one key financing route.

Ratings agencies have downgraded WeWork’s bonds to “junk” status due to a cash crunch. The company reported $1.9 billion in losses in 2018 as it expanded rapidly.

The charismatic Neumann was credited with growing WeWork, founded in 2010, into a real estate giant with operations in 111 cities in 29 countries. It has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements.

The 40-year-old grew up on a kibbutz and in the US, and served as an officer in the Israeli navy.