Home Softbank bails out WeWork with $10bn rescue package
News

Softbank bails out WeWork with $10bn rescue package

Roger Baird

Japanese conglomerate SoftBank has won approval from the WeWork board to take control of the struggling US office space start-up.

Softbank, the firm’s largest investor, is putting together a $10bn rescue package in the business, which it was feared would run out of cash by the end of next month.

The deal will see the Japanese investment firm, chaired by billionaire Masayoshi Son, take control of between 70 per cent to 80 per cent of the business.

WeWork co-founder Adam Neumann (pictured), who stepped down as chief executive last month, has reportedly signed a $1.7bn deal to completely sever his ties with the business, according to the Wall Street Journal.

 

Pulled IPO

The New York-based business, which has hundreds of offices in 111 cities across 29 countries serving more than 527,000 business people a day, will be valued at between $7.5bn to $8bn under the rescue package.

The business, used heavily by tech entrepreneurs, was valued at $47bn at the start of the year, before it was forced to abandon its initial public offering last month.

In total, investors have sunk between $16.8bn and $17.8bn into the business that was founded nine years ago, only to see it valued at between $7.5bn to $8bn as a result of this deal.

WeWork was forced to pull its New York flotation in September, after investors raised concerns about its rapid expansion, heavy losses and even its basic business model, which saw it take long-term leases while renting out spaces over the short term.

 

Controversial CEO

According to the IPO prospectus filed earlier in September, its holding firm, We Company, had cash and cash equivalents of around $2.5bn as of June 30. However, while revenue doubled to nearly $1.8bn in 2018, its losses also more than doubled to $1.9bn.

Co-founder Neumann became an increasingly controversial figure at the business, dogged by allegations of drug use, withdrawing large sums from the business and reportedly owning stakes in the properties the company rents, potentially posing a conflict of interest.

When Neumann resigned from running the firm last month he said: “While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive.”

 

Trusted & Regulated Stock & CFD Brokers

Rating

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission on real stocks

Rating

64 traders signed up today

Visit Now

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

Rating

What we like

  • Sign up today and get $5 free
  • Fractals Available
  • Paypal Available

Min Deposit

$0

Charge per Trade

$1 to $9 PCM

Rating

Visit Now

Investing in financial markets carries risk, you have the potential to lose your total investment.

Available Assets

  • Total Number of Shares999
  • US Stocks
  • German Stocks
  • UK Stocks
  • European Stocks
  • EFTs
  • IPOs
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 $1 - $9 per month
  • NASDAQ $1 - $9 per month
  • DAX $1 - $9 per month
  • Facebook $1 - $9 per month
  • Alphabet $1 - $9 per month
  • Telsa $1 - $9 per month
  • Apple $1 - $9 per month
  • Microsoft $1 - $9 per month

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account

Roger Baird

Roger Baird

Roger Baird is News Editor at Finixio. He has worked as a financial journalist for 20 years reporting on companies, capital markets and the UK economy.