Adam Neumann could reap nearly $ 500 million in cash from his WeWork holdings and go out with a stake in a public company less than 18 months after the failure of the initial public offering cost him his job as CEO.
SoftBank is in advanced talks with the co-founder of WeWork and other shareholders to settle a fierce legal battle stemming from the October 2019 rescue of the Japanese group’s office group, which was needed to help prevent bankruptcy after the IPO crash. familiar with the negotiations said.
Clearing up the lawsuits filed by Neumann and a special commission of the group̵
People familiar with the matter said the BowX Acquisition, an empty check car that raised $ 420 million in an IPO in August, turned to SoftBank, WeWork’s largest shareholder, for a deal that could value WeWork. about $ 10 billion.
$ 47 billion
SoftBank puts WeWork in last round of private funding before failed IPO
Talks between the two groups continue and a deal could be reached in the coming weeks, although negotiations may still fall apart. Allowing legal action against Neumann and others is considered critical to completing the merger with BowX, given that the new public company must attract investors to its shares.
The reasoned estimate will be well below the $ 47 billion that SoftBank placed on the company in its latest round of private financing before the failed IPO that Neumann and his Wall Street bankers once hoped would match or overshadow that level.
But that would be an unexpected leap in Neumann’s fate, an endorsement of a business model that appears to have been threatened as the Covid-19 pandemic empties offices, and another indication of how the Spac boom is transforming capital markets.
SoftBank is said to have approached Neumann and the special committee over the past two weeks with a proposal to settle their dispute over a $ 3 billion bid that was part of its bailout in October 2019. The Japanese group had withdrawn from the agreement. to buy the shares from Neumann and other investors, stating that the terms of the deal were not met.
Opposing parties had to go to court next week over the tender after an earlier trial gave the special commission and Neumann to file a lawsuit against SoftBank.
The agreement under discussion would result in SoftBank paying $ 1.5 billion – half of the disputed amount – to Neumann and other investors, including Benchmark Capital. Neumann would receive about $ 480 million for 25 percent of his holdings, instead of doubling from the 50 percent he could offer. He will also retain three-quarters of his current stakes in the public company.
WeWork has cut staff and moved out of more than 100 open and planned locations since its state changed dramatically last year. Under the leadership of CEO Sandeep Mathrani, the company has drastically reduced costs, although it continues to lose money.
Negotiations are ongoing and the exact amount Neumann and others receive may change.
BowX is run by Vivek Ranadivé and Murray Rode, two former managers of Tibco Software and supported by Bow Capital, a Ranadivé venture capital fund founded with the support of the University of California. In a list of documents last year, he said he intended to look for telecommunications, media and technology companies.
Ranadivé also owns the Sacramento Kings basketball team.
The Wall Street Journal previously reported on negotiations for an agreement.