Former WeWork CEO Adam Neumann and SoftBank Group chairman Masayoshi Son (Credit: iStock, Getty Images)
WeWork has reached an agreement to be taken over by SoftBank Group, in a deal that will value the embattled office-space company between $7.7 billion and $8 billion, people familiar with the matter told The Real Deal.
The transaction will buy out earlier investors and shareholders, including the stake of former CEO Adam Neumann, who owns approximately one-third of the company, those sources said. It was unclear if agreement had been signed, and the high-level talks are fluid.
CNBC first reported that WeWork reached an agreement with SoftBank.
WeWork and SoftBank declined to comment. A spokesperson for Neumann wasn’t immediately available for comment.
As part of the agreement, the Japanese conglomerate will issue a $5 billion in debt and a $1.5 billion tender offer. Its offer was chosen over a proposal from JPMorgan Chase, which involved a $5 billion debt deal.
Neumann will no longer be non-executive chairman, and will serve as an adviser to the board. A special committee led by board members Bruce Dunlevie, of Benchmark Capital and Lew Frankfort, of Flywheel Sports, named Marcelo Claure chairman. Claure, SoftBank’s COO and former CEO of Sprint, was handpicked by Masayoshi Son last month to fix WeWork’s ugly balance sheet.
The less than $8 billion valuation comes as a huge embarrassment to SoftBank, which has invested more than $10 billion in WeWork, and in January valued the company at $47 billion. SoftBank and its $100 billion Vision Fund own about one-third of WeWork.
The agreement caps weeks of uncertainty at WeWork, which abandoned its IPO last month after failing to spark investor confidence in the company. Since then, Neumann stepped down from his role as CEO, and the company has scrambled to secure financing as it faced the prospect of running out of capital as early as next month.
According to its IPO S-1 filing to the SEC, the company committed $47 billion in lease payments to U.S. landlords over the next 10 to 15 years.