Adam Neumann, a co-founder of WeWork, and SoftBank, the partner’s largest shareholder, announced on Friday that they had resolved their legal dispute, paving the way for WeWork to go public just 16 months after SoftBank rescued from the collapse.
WeWork canceled an initial public offering in 2019 after investors complained about the company’s huge losses and criticized its governance practices. Now SoftBank, a large Japanese conglomerate, wants to go public with WeWork through an agreement with a special-purpose acquisition company, a route to the stock market that has become popular in recent months.
As part of the 2019 bailout, SoftBank offered to buy $ 3 billion worth of WeWork shares from Mr. Neumann, who had left the company during his IPO attempt, and from other shareholders. But as soon as the coronavirus was emptying WeWork’s office-sharing sites, SoftBank said last year that it would not proceed with the purchase, which prompted Neumann to sue.
According to the original SoftBank offer, Neumann was to receive $ 960 million, but under the agreement he will receive $ 480 million, because SoftBank is buying half the number of shares, according to a person familiar with the agreement.
“With this litigation resolved, we are fully focused on our mission to reimagine the workplace and continue to meet the growing demand for flexible space worldwide,” said Marcelo Claure, WeWork executive president and senior executive at SoftBank.
SoftBank will spend about $ 1 billion buying shares from other shareholders, also half the amount originally agreed. SoftBank will also pay Neumann $ 50 million to cover his legal expenses, said the person with knowledge of the agreement.
The legal dispute created uncertainty about how much of WeWork each major shareholder owned. This doubt needed to be clarified for the company to go public. SoftBank is in negotiations to combine with BowX Acquisition, a special purpose acquisition company, said the person with knowledge of the deal. It is unclear how advanced the negotiations are.
WeWork has reported only irregular financial results in recent months, so it is unclear how hard the pandemic hit it. Many of your customers have not renewed their membership. WeWork rents space from owners and then charges fees to its members for using that space. To save money, he restructured some of his rental contracts.
SoftBank also supported WeWork with billions of dollars of funding.