WeWork sues SoftBank over canceled $3B tender offer

dionmanu | 177 points

Quote: WeWork’s board said that it “regrets the fact that SoftBank continues to put its own interests ahead of those of WeWork’s minority stockholders.”

Of course they’re going do to that, it’s called fiduciary duty to their own stakeholders! Such diligence is something WeWork’s board seemed to casually overlook for far too long.

At this point why would SoftBank buy WeWork shares that are in all likelihood worth little or perhaps even worthless. They’re deciding to cut their losses and move on.

If I sign a contact to buy a house it still has contingency clauses. If 2 days before closing the house burns to the ground I can walk away. Obviously I don’t want to buy a burning pile of rubble. SoftBank is walking away from buying a burning house and that makes complete sense.

code4tee | 2 months ago

I read that Wework had $4B in the bank at the beginning of the year. Also they are actively trying to reduce their own rent up to 30% from their landlords. And at the same time Wework gives up to 50% discount to its own large tenants, so they can stay during this hard time. No idea how long it can operate like that. If Wework had to crash, I am concerned for the whole US commercial real-estate. Wework is renting so many square feet, that it could be a tsunami of empty offices. Hopefully, current final tenants could work something with the landlords to stay. Either Softbank is trying to get a better deal... or they already know that it is not salvageable anymore.

llsf | 2 months ago

A big chunk of their intensifying crisis will be the drying up of whatever income they still had. Short term rentals are great for the renters: easy to say "stop now", and that's exactly what this COVID-19 crisis has done for many companies. If they were using WeWork before they are now using it less or not at all.

jacquesm | 2 months ago

Not surprising, was wondering how SoftBank seemingly walked away so easily.

If you are Softbank do you use this Covid crisis to back WeWork in to a corner even if their suit is legitimate as they might run out of cash before it reaches the courts?

From what I understood SoftBank already owns a majority of WeWork so how does the company they own, suing them work?

bruceb | 2 months ago

Pure opinion:

On the one hand, they're a real estate company masquerading as a tech company (and getting the funding and valuation unicorns would hope for), and with Coronavirus they have a serious cashflow problem.

On the other hand, there will be a burst of people (re)starting small businesses and wanting space on a flexible basis in a few months time...

LatteLazy | 2 months ago

Thumbs up to Softbank for dodging a bullet! What a timing!

I bet they are smiling ear to ear - could have been one hell of a blow for them - buying quickly deflating unicorn startup sitting on a bunch of depreciating assets.

readhn | 2 months ago

Does this mean Adam won't get his billions?

Simulacra | 2 months ago

Well shared office space is not a good buy these days considering the corona pandemic.

tibbydudeza | 2 months ago

Wow, that won't bode well with the other investors I imagine. At some point in the near future, other players or current investors will have to either pump more cash into this investment or let it go bust. damn, what a story though. rapid growth to rapid decline.

faramarz | 2 months ago

I wonder after the mess of WeWork plays out:

Who buys all those buildings / assets?

There have to be some pretty good deals out there considering a collapse of WeWork / fire sale and the economy for someone who can manage some these assets.

duxup | 2 months ago

Litigation is expensive, but I doubt it's going to cost SoftBank anywhere near $3B (unless they lose, which they probably won't).

xenospn | 2 months ago

I understand that the initial funding was provided through the vision fund, and second round funding through the vision fund was shot down by vision fund members. As as a result, the second round funding was going to be provided by Softbank themselves...

Is this news about that second round funding by Softbank?

chrisjc | 2 months ago

I understand Softbank is walking away from the deal. Does that mean they didn't put in any money yet? How much are they losing from this deal?

jaequery | 2 months ago

Good timing, people have lots of spare attention and the supply chains for salt, butter and corn can probably be expected to bear it.

seemslegit | 2 months ago

Crisis? More like correction.

peeze | 2 months ago

What a surprising surprise.

stephc_int13 | 2 months ago

SoftBank should hold out until WeWork crumbles under the weight of their terrible business model and the current crisis, then purchase their real estate assets for pennies on the dollar.

joejerryronnie | 2 months ago

WeWork has an existential issue in that the entire workforce will emerge from this with at least 2 months of remote work experience. Many, many employers and individuals will realize that remote is OK, and in fact has a ton of benefits.

thehappypm | 2 months ago

I really hope WeWork wins this one. The world of "investing" needs to chill a little and see a few outrageously exuberant bulls absolutely destroyed before we go from a big bubble to a massive bubble, and then to a massive crash.

But then again Masa was already possibly the worst investor in the history of humanity, even before the Vision Fund, so who will take note this time? If he lives through the next 20 years he'll probably run yet another, equally idiotic fund.

H8crilA | 2 months ago