Wework sues Softbank over scrapped $3bn tender offer
Wework’s special committee is suing Softbank over the Japanese investment giant’s decision to abandon a $3bn (£2.4bn) share purchase, the company confirmed today.
Softbank, which holds a controlling stake in Wework, agreed to the tender offer last year as part of a dramatic rescue plan, but withdrew citing the coworking firm’s failure to meet “certain conditions” in the agreement.
In a lawsuit filed in Delaware, Wework accused Softbank of breaching its contract and its fiduciary duty to minority shareholders.
“Instead of abiding by its contractual obligations, Softbank, under increasing pressure from activist investors, has engaged in a purposeful campaign to avoid completion of the tender offer,” the special committee said in a statement.
The committee alleged that Softbank had tried to block Wework’s roll-up of its joint venture in China — one of the conditions of the tender offer — before claiming the conditions of the offer had not been met.
“This, and Softbank’s other claims related to its failure to complete the tender offer, are therefore either disingenuous or irrelevant to Softbank’s contractual and other obligations,” the board said.
Wework is seeking legal action to force Softbank either to complete the share purchase or pay damages.
Softbank has said it remains “fully committed” to the coworking company, adding: “The termination of the tender offer will have no impact on Wework’s operations, customers, five-year business and strategic plan, or the vast majority of Wework’s current employees.”
But the decision came as a major blow to ousted founder Adam Neumann, who was set to gain roughly $1bn from the transaction, as well as for hundreds of current and former employees who held shares in the company.
Wework was forced to scrap plans for a public listing last year due to a lack of investor interest and its plummeting valuation, as well as concerns over its corporate governance.
Softbank has ploughed more than $10bn into the troubled company and initiated a turnaround plan that includes axing 4,000 jobs.
But relations between Wework’s board and its major shareholder have reportedly soured in recent months, with the committee stating it was gearing up for a fight with the Japanese conglomerate.
A Softbank spokesperson said the company would “vigorously” defend the lawsuit.
“Nothing in the special committee’s filing today credibly refutes Softbank’s decision to terminate the tender offer,” they said.
“Their filing is a desperate and misguided attempt now to rewrite that agreement and to rewrite the history of the past six months.”