Japanese investment powerhouse SoftBank has confirmed that it will not be purchasing $3 billion worth of WeWork shares, citing multiple “significant” criminal and civil investigations into WeWork and its finances among other factors.
Business Insider reports that SoftBank has confirmed that it will not be proceeding with a $3 billion deal to buy shares in the collaborative workspace firm WeWork citing “multiple, new, and significant” civil and criminal investigations into the firm, among other factors.
On Thursday, the firm stated that it would be “irresponsible” to continue with the deal. This shuts down a deal that would have seen SoftBank purchase $3 billion worth of WeWork shares, $970 million of which belonged to former CEO Adam Neumann, according to Business Insider.
Rob Townsend, the senior vice president and chief legal officer at SoftBank, stated that the firm remained committed to WeWork which it bailed out in October of 2019. Townsend added that WeWork had not met certain conditions “leaving SoftBank no choice but to terminate the tender offer.” Specifically, WeWork’s failure to obtain the right to antitrust approvals and rolling up it’s China and Asia joint ventures by April 1.
“Given our fiduciary duty to our shareholders, it would be irresponsible of SoftBank to ignore the fact that the conditions were not satisfied and to nevertheless consummate the tender offer,” said Townsend. Benchmark investor Bruce Dunlevie and Coach CEO Lew Frankfort told Business Insider: “The Special Committee is surprised and disappointed at this development. The Special Committee will evaluate all of its legal options, including litigation.”
In December of 2019, Breitbart News reporter David Ng reported on some of the issues that WeWork was facing, writing:
The Journal found that investors eager to take part in the planned IPO bought into Neumann’s pitch and rarely expressed skepticism despite mounting financial difficulties and missed projections. Masayoshi Son, the CEO of SoftBank, was one of the biggest boosters, pushing an “already wild-spending Mr. Neumann to act bigger and crazier,” according to the report.
Other big banks including JPMorgan and Goldman Sachs championed WeWork in the hopes of landing its coveted IPO, which was ultimately called off in a major embarrassment for all.
At the heart of the fiasco was WeWork’s board of directors, which the Journal concluded was derelict in its responsibilities.
“The outside board directors, all of whom had decades of experience in business and finance, voted for years to approve decisions by Mr. Neumann that paved the way for WeWork’s near collapse,” the Journal found.
The report alleges that some board members had potential conflicts of interest, including one director whose private equity firm was in a joint venture with WeWork, and two directors who had children who worked at the company. Another board member borrowed money from WeWork.
Board members also approved “hundreds of millions of dollars for acquisitions” of tech companies that were viewed by top executives as wasteful.
Neumann had been known for his unpredictable and self-aggrandizing behavior but he nonetheless managed to seduce investors and employees with his cult of personality.
The catalog of outrageous conduct includes alleged drug use and his copyrighting of the word “We” which he charged his own company to use.
Read the full report at Breitbart News here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address lucasnolan@protonmail.com
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