WeWork facing crisis after SoftBank pulls takeover bid

(Image credit: Pixabay)

Softbank has announced that it has retracted its $3 billion tender offer for co-working company WeWork.

The Japanese investment giant has revealed there were several conditions that WeWork could not meet to make the deal work, including several ongoing criminal and civil cases, as well as the company failing to obtain the necessary antitrust approvals by April 1. 

The ongoing global economic crisis due to the Covid-19 outbreak was also named as a factor in the deal falling through.

Cancelled investment

Agreed last year, the tender offer was a part of a bail-out plan put forward by Softbank. It controversially included an offer to buy $975 million worth of shares belonging to WeWork founder Adam Neumann.

Sources at WeWork stated that the company is surprised and disappointed by the decision and is evaluating all legal options including litigation, however the company announced that it is still committed to providing $4.5 billion in debt to help boost its working capital.

Last year a failed IPO impacted WeWork severely, bringing the company to the brink of insolvency. SoftBank stepped in with a rescue package of $10 billion while taking away 80% ownership of the company, an action which also resulted in Neumann leaving the company.

It is also reported that the investors were worried about the company’s losses and its questionable business model which included taking commercial properties on a long term lease and then renting out as working spaces for short-term.

While SoftBank had planned massive changes to bring a turn around in the fortunes of the company, the coronavirus outbreak put both parties under immense pressure. 

Mass working from home policies implemented by many businesses mean that WeWork will have to still pay for its long-term leases, even if the companies that have rented working spaces have cancelled their contracts citing travel restrictions.

Though the company reported a loss of $1.25 billion in the third quarter last year, WeWork last week revealed that it expects to be able to overcome the economic slowdown thanks to a war chest of $4.4 billion in cash and cash commitments.

Via: Reuters

Jitendra Soni

Jitendra has been working in the Internet Industry for the last 7 years now and has written about a wide range of topics including gadgets, smartphones, reviews, games, software, apps, deep tech, AI, and consumer electronics.  

Latest in Pro
cybersecurity
What's the right type of web hosting for me?
Security padlock and circuit board to protect data
Trust in digital services around the world sees a massive drop as security worries continue
Hacker silhouette working on a laptop with North Korean flag on the background
North Korea unveils new military unit targeting AI attacks
An image of network security icons for a network encircling a digital blue earth.
US government warns agencies to make sure their backups are safe from NAKIVO security issue
Laptop computer displaying logo of WordPress, a free and open-source content management system (CMS)
This top WordPress plugin could be hiding a worrying security flaw, so be on your guard
construction
Building in the digital age: why construction’s future depends on scaling jobsite intelligence
Latest in News
Ray-Ban Meta Smart Glasses
Samsung's rumored smart specs may be launching before the end of 2025
Apple iPhone 16 Review
The latest iPhone 18 leak hints at a major chipset upgrade for all four models
Quordle on a smartphone held in a hand
Quordle hints and answers for Monday, March 24 (game #1155)
NYT Strands homescreen on a mobile phone screen, on a light blue background
NYT Strands hints and answers for Monday, March 24 (game #386)
NYT Connections homescreen on a phone, on a purple background
NYT Connections hints and answers for Monday, March 24 (game #652)
Quordle on a smartphone held in a hand
Quordle hints and answers for Sunday, March 23 (game #1154)