Adam Neumann could get nearly $ 500 million in cash from his WeWork stakes and walk away with a stake in a public company, less than 18 months after the high-profile failure of his initial public offering cost him his job as CEO.
SoftBank is in advanced talks with the WeWork co-founder and other shareholders to resolve a bitter legal battle stemming from the Japanese group’s October 2019 bailout of the office group, which was necessary to help it avoid bankruptcy in the wake of the collapse of the IPO. with the negotiations he said.
The cleanup of the litigation brought by Neumann and a special committee of independent group directors would clear the way for WeWork to be bought by a special-purpose acquisition company, giving it the public listing it tried and failed to achieve in 2019.
People familiar with the matter said BowX Acquisition, a blank check vehicle that raised $ 420 million in an IPO in August, had approached SoftBank, WeWork’s largest shareholder, about a deal that could value WeWork at roughly $ 10 billion.
$ 47 billion
The price SoftBank put on WeWork in its last private funding round before the failed IPO
Talks between the two groups are continuing and an agreement could be reached in the coming weeks, although the negotiations could still fail. Resolving the legal dispute with Neumann and others has been seen as critical to completing a merger with BowX, as the new public company must attract investors to its shares.
The disputed valuation would be well below the $ 47 billion price that SoftBank imposed on the company in its last round of private financing before the failed initial public offering, which Neumann and his Wall Street bankers once hoped would equal or overshadow that level.
But it would represent an unexpected upturn in Neumann’s fortunes, an endorsement of a business model that seemed in jeopardy when the Covid-19 pandemic emptied offices and another indication of how the Spac boom has transformed capital markets.
SoftBank is said to have approached Neumann and the special committee in the past two weeks with a proposal to resolve their dispute over a $ 3 billion public offering that was part of its October 2019 bailout. The Japanese group had pulled out. of the deal to buy the shares of Neumann and other investors, saying the terms of the deal had not been met.
The opposing parties were due to face each other in court next week over the public offering after an earlier trial gave the special committee and Neumann the chance to present their case against SoftBank.
The settlement under discussion would result in SoftBank paying $ 1.5 billion, half of the disputed sum, to Neumann and other investors, including Benchmark Capital. Neumann would receive about $ 480 million for 25% of his stakes, instead of twice the 50% he could have bid. It would also retain three-quarters of its current stakes in the public company.
WeWork has laid off staff and abandoned more than 100 open and planned locations since its fortunes changed dramatically last year. Under the leadership of CEO Sandeep Mathrani, the company has slashed costs, although it continues to lose money.
The talks continue and the exact amount Neumann and others receive may change.
BowX is led by Vivek Ranadivé and Murray Rode, two former executives at Tibco Software and backed by Bow Capital, the venture capital fund Ranadivé founded with the support of the University of California. In listing documents last year, he said he intended to search for telecommunications, media and technology companies.
Ranadivé also owns the Sacramento Kings basketball team.
The Wall Street Journal previously reported on the settlement talks.