WeWork Sues SoftBank For Terminating $3 Bln Tender Offer

WeWork’s parent company, We Company, said it has filed a lawsuit against Japanese conglomerate SoftBank Group Corp. for failing to consummate a $3 billion tender offer for the company’s shares.

After WeWork’s failed attempt at an initial public offering last year, SoftBank acquired a majority stake in the office sharing company in a bailout, severing most ties with WeWorks’ co-founder Adam Neumann.

Under the rescue package, SoftBank agreed to take a controlling stake in WeWork and also offer significant funding to the company. The company said it will provide $5 billion in new financing and launch a tender offer of up to $3 billion for existing WeWork shareholders.

WeWork filed the lawsuit in the Delaware Court of Chancery, accusing SoftBank of breach of contract and breach of fiduciary duty to WeWork’s minority stockholders, including hundreds of its current and former employees.

WeWork alleged that Softbank is avoiding completion of the tender offer under increasing pressure from activist investors.

“Softbank first tried to thwart the roll-up of WeWork’s joint venture in China, and then claimed that the conditions to closing the tender offer – one of which is the roll-up of WeWork’s joint venture in China – were not met,” WeWork said in a statement.

WeWork noted that SoftBank has already received most of the benefits provided to it under the master transaction agreement or MTA, including broad control of WeWork and additional economic benefits.

Last Thursday, SoftBank said it decided to terminate the tender offer as several of the closing conditions were not satisfied by the April 1 deadline.

The Japanese company cited pending criminal and civil investigations into WeWork, failure to restructure a joint venture in China and global restrictions arising from the COVID-19 pandemic as reasons for terminating the tender offer.

SoftBank also noted that Adam Neumann, his family, and large institutional stockholders such as Benchmark Capital would have benefited most from the tender offer.

In March, SoftBank said it plans to buy back up to 500 billion yen or about $4.76 billion of its stock, taking a step advocated by activist investor Elliott Management to boost stockholder value.

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