By Tuesday, news had leaked that the Japanese tech conglomerate known for investing heavily in U.S. tech startups could pull out of its commitment to buy $3 billion of WeWork’s shares from investors.
After the coworking space giant’s stocks fell to record lows in 2019, SoftBank pledged to make a $3 billion tender offer for privately held WeWork shares along with a $1.5 billion acceleration of equity and $5 billion in syndicated debt. But after looking into WeWork’s business (including probes by the Securities and Exchange Commission and Justice Department), SoftBank has reportedly found a way to legally walk away from its plan to rebuy the shares.
The debt, according to the source who spoke to the Wall Street Journal, would not be affected by the decision. The bailout, however, would affect all shares including those owned by WeWork co-founder and former CEO Adam Neumann.
While not much information about SoftBank’s decision is available, there have been several obvious signs that SoftBank has lost confidence with WeWork in the last six months. The company valuation fell from $47 billion in January 2019 to just $8 billion, by SoftBank’s own estimates, in October.
SoftBank CEO Masayoshi Son was also one of the main people to push for Neumann’s resignation as CEO in September. And now that cities clamp down on lockdowns and force people to work from home amidst the coronavirus outbreak, the company’s future is completely in the air.