SoftBank’s Proposed WeWork Buyout Pegs Valuation At Almost $8B

Softbank is reportedly in advanced talks to take over troubled startup and worksharing space WeWork, which was once one of the hottest startups around but saw itself fizzle amid talks of internal strife and a cancelled IPO.

SoftBank, which is led by Japanese billionaire Masayoshi Son, will spend between $4 billion and $5 billion on existing shares and new funding, CNBC reported. WeWork will be valued at around $7.5 to $8 billion, and Softbank the company itself will take over, not the company’s Vision Fund, which doles out capital.

The deal will include a $3 billion tender offer with a $1.5 billion equity acceleration and $5 billion in syndicated debt. Softbank wants to speed WeWork along to profitability.

Marcelo Claure, a SoftBank executive, is probably going to be chairman of the newly acquired company. The previous CEO, Adam Neumann, will likely see his stake in the company drop to low double digits.

SoftBank has already invested $10.65 billion in the company, and a piece of the new funding will debt financing involved with expiring warrants.

When WeWork revealed its soon-to-be cancelled IPO prospectus in August, it showed a $900 million loss in the first half of 2019, sparking worry over how it was being managed.

In July, the company agreed to pay former CEO Neumann $5.9 million in stock for the “We” trademark, which was previously the property of We Holdings, an investment arm under Neumann.

Neumann left the company last month, and the company has been diligently chasing down financing leads in an attempt to raise new capital. It has met with J.P. Morgan about debt financing, and all of the negative press and inner company strife has led to a difficult relationship between Son and Neumann.

WeWork was reportedly going to lay off about 13 percent of its staff, or around 2,000 people, as soon as last week. The company said that more layoffs could be coming.

The news is particularly urgent because WeWork could run out of cash next month, according to Reuters, which is reporting that as part of the deal, Neumann could step down from The We Company’s board and serve in an adviser capacity.

The board is going to meet on Tuesday (Oct. 22) to decide whether or not to take the deal.