Adam Neumann agreed to a 50 percent reduction in the payment he will receive from WeWork’s biggest investor, SoftBank, ending a legal battle and paving the way for the shared office provider to go public.
SoftBank said on Friday that it entered into an agreement with Neumann and two WeWork board directors, who sued SoftBank for the Japanese group’s reluctance to execute a $ 3 billion offer it promised as part of a rescue package for the company.
The deal comes 18 months after a failed initial public offering that led WeWork to the brink of bankruptcy after a series of serious mistakes that led to Neumann’s resignation as chief executive.
Under the terms of the agreement, SoftBank would spend $ 1.5 billion to buy shares in Neumann, WeWork employees and other investors in the company, including the risk group Benchmark Capital, according to people familiar with the matter. . Neumann can sell up to $ 500 million worth of shares in the deal.
SoftBank had initially planned to buy twice that amount as part of a multi-billion dollar redemption package in October 2019, but later withdrew from the public offering, claiming that WeWork failed to meet a set of conditions behind the deal. rescue.
Marcelo Claure, WeWork’s executive chairman, said the deal was “the result of all parties coming to the table to do what is best for WeWork’s future”.
Resolving the dispute with Neumann was instrumental in allowing WeWork to potentially merge with a listed blank check company that would allow it to do business in public markets, said a person with direct knowledge of the matter.
SoftBank is currently in talks with BowX Acquisition, a special purpose acquisition company that raised $ 420 million in an IPO in August, over a merger that could value WeWork between $ 8 billion and $ 10 billion, they said people familiar with the subject.
The negotiations have been active for several weeks and a deal may be announced soon, although a person involved in the negotiations said that WeWork could still choose to go public through a traditional IPO or a direct listing.
The new valuation would be very different from the $ 47 billion mark reached by WeWork in a financing round it secured before the company faced criticism from investors for its huge losses, governance issues and revelations that Neumann was personally benefiting from a business series.
Neumann would have no role in the management of WeWork, nor would he have a seat on the company’s board of directors, people informed of the deal said. However, he would retain most of his stake in the company.