Can WeWork get back on track?
The expulsion of a company founded by yourself is a nightmare for every founder.
Wein’s founder Adam Neumann’s nightmare came, but along with it, there was a “golden stone parachute” that Softbank had invested heavily in.
October 22 (local time), according to The Wall Street Journal, Softbank reached a deal with WeWork, which stipulated that Neumann would resign from the company’s board of directors and waive his voting rights. In exchange, Softbank will buy his nearly $1 billion in WeWork stock, pay him $185 million in “consultation fees,” and provide him with a $500 million line of credit.
But this is only a prelude, and Sun’s big hand is still behind.
According to the latest report from Business Insider, Softbank will invest $5 billion in new financing, repurchase up to $3 billion in stocks, and accelerate the planned $1.5 billion investment. After the transaction is completed, Softbank will own approximately 80% of WeWork. Since Softbank will not have majority voting rights, WeWork will become a partner of Softbank, not a subsidiary.
“It’s not uncommon for the world’s leading technology disruptors to face growth challenges like WeWork. As the vision remains the same, Softbank decided to merge the company by providing substantial capital injection and operational support.” Justice said in the statement.
Image Source: Business Insider
Although experts generally believe that Softbank is the right measure to take WeWork’s control from Neumann, the nearly $1.7 billion “ransom” has shocked the tech and financial communities. Eric Schiff, CEO of private equity firm Patriarch Organization, said: “This is really horrible. I think any money over $1 is more than what they need to pay.”
Loren Trimble, CEO of AArete, a global consulting firm, said: “SoftbankThis is true, allowing them to maximize their initial investment opportunities on a new, additional investment basis. But experts believe that Softbank shareholders have good reasons to be dissatisfied with the deal. Coorsmo said: “If anyone has reason to feel wronged, it is the public shareholder of Softbank. Softbank seems to be a lot of money.
WeWork, founded in 2010, is the founder of the shared office operation model. This unicorn, which was once valued at $47 billion and was called “the next Alibaba” by Sun Zhengyi, publicly submitted the IPO document on August 14 this year. I did not expect it to be followed by a series of disasters. .
After being rigorously reviewed by investors and the media about their financial situation and company management, everyone began to question WeWork. In the end, WeWork postponed the IPO on September 16. Neumann’s continually exposed personal luxury lifestyle and the efforts to foster internal family powers have made investors feel uneasy. Neumann retired as CEO on September 24 and resigned from the company’s board of directors recently. Marcelo Claure is the interim chairman, and the CEO of Softbank International is the secret weapon of Softbank in an attempt to save WeWork.
According to Business Insider, Claure will address the WeWork staff at a company-wide meeting on Wednesday morning. Earlier Tuesday, employees were angry about Softbank’s trading, and after a massive layoff, they lacked communication about their work.
The company said in a statement on Tuesday: “Softbank’s $5 billion fund provides WeWork with sufficient liquidity to execute its business plan, thereby accelerating the company’s profitability and positive free cash flow.”
From $47 billion to the current 8 billion, the most eye-catching unicorn listing dream was shattered. Sun Zhengyi promoted this crazy capital game with real money and silver, and can let WeWork get back on track.
Header Source: Reuters & Business Insider