SoftBank Wants Majority Stake In WeWork, Sans Liabilities

SoftBank looks to become the majority owner of WeWork without getting into long-term lease obligations, Reuters said on Saturday, Oct. 19.

Sources told Reuters that SoftBank has delivered a $5 billion financing rescue that The We Company — parent of New York-based WeWork — is considering alongside a proposal by JPMorgan Chase.

SoftBank gave WeWork a financing offer that would give it control and told Reuters it wants to put money into the office-sharing startup and have a bigger role in operations.

A special board committee formed by The We Company to evaluate financing proposals had been “working around the clock” with advisers to reach an agreement, the sources said. “The negotiations could spill into next week,” one of the sources cautioned.

The new figure is a fraction of the $47-billion valuation the startup had in January. The talks are fluid and the terms could change, the sources told Reuters.

Although the SoftBank contribution is still being negotiated, its investment is expected to give it a majority stake in WeWork. “Were this to translate to formal voting control for SoftBank, it could force it to consolidate the loss-making company on its balance sheet,” the sources said.

WeWork could run out of money by next month — despite the fact that it was valued at $47 billion just several months ago, making it America’s highest-valued private firm at the time.

While it was expected to be one of the biggest IPOs of the year, the company — which rebranded itself to The We Company — decided to shelve its plans to go public last month after it divulged extensive losses. 

“It’s like you’re trying to sell a property and you’re talking about a renovation and some cosmetic work and all of a sudden you have a fire,” said Jake Cantu, global co-leader of the technology, media and telecommunications practice at consulting firm AlixPartners in Chicago. “Then it’s really a completely changed scenario.”