Buyer's remorse

7 April 2020 By Liam Proud Follow @liamwardproud

The office-sharing group is suing its main shareholder after SoftBank canned a $3 bln tender offer, previously part of last autumn’s rescue deal. Minorities, including employees, may lose out. But a questionable board fight is the last thing WeWork needs as tenants stay at home.

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The We Company, directed by its board special committee, on April 7 filed a lawsuit against the office sublessor’s largest shareholder, SoftBank Group, challenging the Japanese conglomerate’s decision to terminate a $3 billion tender offer agreed last year.

The committee was set up in October 2019 to represent minority shareholders as the WeWork parent weighed up rival bailout proposals from SoftBank and JPMorgan. It eventually opted for SoftBank’s $9.5 billion rescue package, which included $6.5 billion in debt and equity financing for the company and a commitment to buy $3 billion of shares from existing investors, including former Chief Executive Adam Neumann.

SoftBank on April 2 terminated the latter purchase “because certain conditions to the tender offer were not satisfied”. It cited the existence of criminal and civil probes into the startup, WeWork's failure to restructure a joint venture in China and the impact of the coronavirus pandemic.

"SoftBank's failure to consummate the tender offer is a clear breach of its contractual obligations ... as well as a breach of SoftBank's fiduciary obligations to WeWork's minority stockholders, including hundreds of current and former employees," the special committee said in an April 7 statement.

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