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Market Overview

SoftBank Acquires 80% Ownership Of WeWork In Rescue Deal


Tokyo-based investment giant SoftBank (OTC: SFTBY) received approval from the board of co-working startup WeWork to take for a multibillion-dollar takeover deal, The Wall Street Journal reported Tuesday.

WeWork would be valued at about $8 billion with the deal.

What Happened

The terms of the deal include a nearly $1-billion stock purchase from WeWork co-founder Adam Neumann, as well as $500 million in credit to Neumann in order to help repay a JPMorgan Chase (NYSE: JPM) loan, the Journal reported. A $185-million consulting fee for Neumann is also part of the deal.

JPMorgan is the third-largest external shareholder in WeWork behind SoftBank and venture capital firm Benchmark and reportedly made a $5-billion funding offer to the startup.

The SoftBank deal would also strip WeWork co-founder Adam Neumann of his exceptionally large voting powers and chairmanship of the company, according to the Financial Times. His ownership would be reduced to less than 10% of the company, with few voting rights.

What's Next

After SoftBank’s buyout, WeWork’s on-paper value would drop to approximately $8 billion. Ironically, it was the SoftBank investment of $10 billion that served as a major factor in surging the startup’s value to $47 billion.

Last month, WeWork bailed out on perhaps what was the most anticipated initial public offering of the year and has been looking to raise funds ever since.

Last week, British newspaper The Guardian reported that WeWork was set to lay off at least 2,000 employees — approximately 13% of its total workforce.


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