Adam Neumann could raise nearly $ 500 million in cash from his WeWork stakes and emerge with a stake in a public company, less than 18 months after the much-publicized failure of his IPO cost him his post as CEO .
SoftBank is in advanced talks with WeWork co-founder and other shareholders to settle a bitter legal battle from the Japanese group October 2019 rescue of the office group, which was needed to help it avoid bankruptcy in the wake of the IPO collapse, people familiar with the negotiations said.
The settlement of the litigation brought by Neumann and a special committee of independent directors of the group would pave the way for the takeover of WeWork by a special purpose acquisition company, giving it the public listing that it attempted and did not. managed to get in 2019.
People familiar with the matter said that BowX Acquisition, a blank check vehicle that raised $ 420 million in an IPO in August, approached SoftBank, WeWork’s largest shareholder, about a deal that could value WeWork at around $ 10 billion.
$ 47 billion
The price SoftBank put on WeWork in its last private financing round before the IPO failed
Talks between the two groups are continuing and a deal could be reached in the coming weeks, although negotiations could still collapse. Resolving the legal dispute with Neumann and others was seen as key to completing a merger with BowX, given that the new public company must attract investors to its shares.
The valuation mentioned would be good below the price of $ 47 billion SoftBank put the company on its last round of private financing before the failed IPO, which Neumann and his Wall Street bankers once hoped to match or eclipse that level.
But it would represent an unexpected rebound in Neumann’s fortunes, an endorsement of a business model that appeared to be in peril like the Covid-19 pandemic. offices emptied and another indication of how the Spac arrow transformed financial markets.
SoftBank reportedly approached Neumann and the special committee over the past two weeks with a proposal to settle their dispute over a $ 3 billion takeover bid that was part of its October 2019 bailout. The Japanese group had withdrawn from agreement to buy shares from Neumann and other investors, claiming that the terms of the deal had not been met.
The opposite sides were due to a clash in court next week over the takeover bid after an earlier lawsuit gave the special committee and Neumann standing to bring their action against SoftBank.
The settlement under discussion would result in SoftBank paying $ 1.5 billion – half of the amount in dispute – to Neumann and other investors, including Reference capital. Neumann would receive around $ 480 million for 25% of his holdings, rather than double the 50% he could have bid. He would also keep three-quarters of his current holdings in the public company.
WeWork has reduced its staff and got out over 100 open and planned locations since her fortunes drastically changed last year. Under the leadership of CEO Sandeep Mathrani, the company has significantly reduced costs, although it continues lose money.
Talks are continuing and the exact amount Neumann and others receive may change.
BowX is led by Vivek Ranadivé and Murray Rode, two former executives of Tibco Software and backed by Bow Capital, the Ranadivé venture capital fund founded with support from the University of California. Listing documents last year, he said he intended to research telecom, media and tech companies.
Ranadivé also owns the Sacramento Kings basketball team.
The Wall Street Journal earlier reported on settlement talks.