Japan-based SoftBank Group has taken control over the operations of WeWork, a US-based coworking company. The investment bank has paid Co-founder Adam Neumann a whopping amount of $685 million to step down from the board of the company, as well.
Owned by The We Company, the coworking startup has been facing losses. Eventually, SoftBank invested $10 billion in it, while other financial institutions like JPMorgan Chase & Co also offered to help WeWork with a bail-out plan.
According to reports by The Wall Street Journal, the deal is expected to value the company at about $8 billion. In January 2019, the company was valued to be at $47 billion.
Post this, Neumann decided to take the company public by filing for an initial public offering (IPO), which however did not turn out to be in his favour, as stocks of Uber and Slack began to be under-valued by investors. This hastened the plans for the IPO and led SoftBank to force Neumann to step down.
SoftBank, which is preparing for its second Vision Fund and looking to raise about $108 billion, owns about 33 percent of WeWork. It will also buy stocks from the former Chief Executive for $970 million. He will also retain his share of a little over a fifth of WeWork.
The Japan-based investment bank has agreed to give Neumann an additional $500 million to repay his personal loans and also $185 million as consulting fees, reported The Wall Street Journal.
SoftBank will also launch an additional tender offer of $3 billion to acquire shares from the company’s existing investors and employees.
This is not the first time that a CEO of a major startup has been forced to step down. In 2017, Uber Co-founder Travis Kalanick also had faced the same after a rebellion from his board over a string of scandals.
(Edited by Suman Singh)
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