SoftBank  ( SFTBF ) will pump $ 5 billion into The We Company and accelerate $ 1.5 billion in capital, according to one of the two issued statements, the company originally due the company next year.
SoftBank, already WeWorks largest investor, also offers to buy shares worth up to $ 3 billion from existing investors and shareholders. SoftBank's Vision Fund will also exchange all of its shares in regional WeWork joint ventures across Asia, excluding the Japanese joint venture, for WeWork shares.
All in all, SoftBank's 80% stake in the beleaguered startup represents a tremendous boost over the nearly 30% that SoftBank and its Vision Fund are said to already own.
The Bailout is Expected to Value WeWork According to a person familiar with the matter, around $ 8 billion. This is a staggering $ 47 billion decline and an added embarrassment for a company that had planned to go public not so long ago. At the lower rating, SoftBank ( SFTBF ) would have put more money into WeWork than the company is worth.
SoftBank's stock fell 2.5% in Tokyo after the deal was announced.
Adam Neumann, the controversial co-founder of WeWork, will also retire from the board and become a member of the supervisory board. He has already given up his position as CEO. SoftBank Chief Operating Officer Marcelo Claure will become Executive Chairman of an expanded WeWork board. The Management Board receives voting rights control over Neumann shares.
The announcement did not include details of Neumann's payout, but the WeWork founder got away with up to $ 1.7 billion. SoftBank's takeover bid for Neumann shares is limited to $ 975 million. The package includes an additional US $ 500 million loan repayment facility and a $ 185 million advisory fee to SoftBank, according to the person familiar with the matter.
Details Neumann's payout was first reported in the Wall Street Journal.
The deal covers two turbulent months for WeWork, in which Neumann oversaw a catastrophic attempt to bring the company to the public. The much-anticipated IPO was postponed after investors disagreed with the assessment and criticized the corporate governance of the provider of joint workspaces.
In a statement, SoftBank CEO Masayoshi Son downplayed the debacle.
"It's not uncommon for the world's leading technology disrupters to experience growth challenges that WeWork has just faced," said Son.
Claure – who already holds multiple functions as CEO of SoftBank's international operations, Chief Operating Officer of SoftBank, Executive Chairman of Sprint ( S ) pointing to the Latin American Innovation Fund of SoftBank, now has the task of turning a hard-fought unicorn under close scrutiny.
"The new capital provided by SoftBank will get the company back on track, and I strive to achieve profitability and positive free cash flow," states a statement by Claure.