WeWork’s Adam Neumann once said he had a ‘beautiful relationship’ with SoftBank’s Masa Son; now he calls out ‘abuse of power’ in lawsuit filing

- Advertisement -
KEY POINTS
  • WeWork’s former CEO, Adam Neumann, is suing SoftBank for backing out of its $3 billion tender offer to WeWork’s early shareholders.
  • Neumann once said he had a “beautiful relationship” with SoftBank’s Masayoshi Son; in the lawsuit, he accuses the company of “abuse of power.”
  • Their relationship began to sour toward the end of 2018 when SoftBank reduced plans for a previous investment, according to a person familiar with the negotiations.
- Advertisement -
- Advertisement -
- Advertisement -

WeWork cofounder and former CEO Adam Neumann, who once called his relationship with SoftBank’s Masa Son “beautiful”, is now suing the Japanese conglomerate — and his language has changed dramatically.

In the lawsuit, Neumann accuses SoftBank of backing out of a key provision of its nearly $10 billion bailout of the coworking company, which SoftBank agreed to in October. The deal gave SoftBank control of the company and included a $3 billion tender offer to WeWork’s early shareholders, but SoftBank withdrew the tender offer last month. Neumann would have been the biggest beneficiary of the tender offer, cashing out $970 million worth of his stake. Other early investors and employees would have also sold shares in the offer.

In his complaint, Neumann alleges that SoftBank “doubled down on their abuse of power” and argues that its “deteriorating” financial position influenced its decision to renege on its obligations. It calls out Masa Son, accusing him and others at SoftBank of using influence to pressure investors to prevent the roll-up.

The suit also accuses SoftBank of “secretly taking actions” to undermine the agreement.

In response to the lawsuit, SoftBank Group’s Chief Legal Officer Rob Townsend said the company will “vigorously defend itself against these meritless claims” and that it “had no obligation to complete the tender offer.”

Neumann’s relationship with SoftBank began to sour toward the end of 2018, before it spilled out into the public. SoftBank was set to invest $20 billion in WeWork for a majority stake. A source familiar with the deal tells CNBC that it took nine months to hammer out, only for Softbank to walk away on the night of signing: December 24, 2018. The capital that Softbank did invest, $3 billion, gave WeWork a $47 billion private valuation before its botched IPO last year.

A spokesperson for Softbank declined to comment on the details of the 2018 financing.

The source, who spoke on the condition of anonymity, says that WeWork had already begun to spend the capital to reach ambitious 2019 revenue goals, which were part of the deal.

WeWork’s business model requires signing long-term leases for commercial office space and extensive renovations before getting shorter term tenants into the space, a process that can take up to a year.

The person said that when SoftBank backed out, WeWork was forced to finance the without Masa Son’s full financial backing. The pressure for more capital led WeWork to seek an IPO earlier than intended, in September of 2019, which exposed corporate governance issues and massive losses. Shortly after that, WeWork withdrew the IPO and Neumann departed as CEO.

Home of Science
Follow me

- Advertisement -

Discover

Sponsor

Latest

Dire feelings on Main Street on eve of small business lending program launch

KEY POINTS The National Federation of Independent Business’ Research Center is out with a third survey on the impact of the COVID-19 pandemic, and...

Man looking for Mayfair ‘guardian angel’ who saved his lifeon June 19, 2021 at 12:46 pm

A woman helped Mathew O'Toole while he was suffering from a stroke in Wigmore Street, Mayfair.A woman helped Mathew O'Toole while he was suffering...

Covid: Increasing confidence jabs work against Indian varianton May 16, 2021 at 1:27 pm

There is "increasing confidence" Covid vaccines are effective against the variant, Matt Hancock says.image copyrightGetty ImagesThe UK has "increasing confidence" that Covid-19 vaccines work...

French Open 2021: Naomi Osaka faces default from Grand Slam for refusing to speak to mediaon May 30, 2021 at 3:46 pm

World number two Naomi Osaka faces expulsion from the French Open if she continues to refuse to speak to the media.Japan's Osaka said last...

Coronavirus update: Novavax begins vaccine trials; Brazil reports second-highest number of cases in world

Eased lockdowns and lifted restrictions have placed significant pressure on the global drug pipeline. The global pandemic, which has affected more than 5.5 million, is forcing...
Home of Science
Follow me