Neumann Agrees to Reduce SoftBank Settlement on WeWork by 50%

Adam Neumann has agreed to a 50% discount on the payment he will receive from WeWork’s largest investor, SoftBank, ending a legal battle and paving the way for the shared office provider to go public.

SoftBank said on Friday it had reached a settlement agreement with Neumann and two directors of WeWork, who sued SoftBank over the Japanese group’s reluctance to execute a $ 3 billion takeover bid it had promised in part of a rescue plan for society.

The deal comes 18 months after a botched IPO that brought WeWork to the brink of bankruptcy, following a series of wide-ranging blunders that led to Neumann’s resignation as chief executive.

Under the terms of the deal, SoftBank would spend $ 1.5 billion to buy shares in Neumann, WeWork employees and other investors in the company, including venture capital group Benchmark Capital, people say. informed on the matter. Neumann can sell up to $ 500 million in shares as part of the deal.

SoftBank originally planned to buy double that amount as part of a multibillion-dollar bailout in October 2019, but later reneged on the take-over bid, claiming WeWork had failed. to fulfill a set of conditions behind the bailout agreement.

Marcelo Claure, executive chairman of WeWork, said the settlement was “the result of all parties coming together to do what’s best for the future of WeWork.”

Settling the dispute with Neumann was key to allowing WeWork to potentially merge with a listed blank check company that would allow it to trade in the public markets, said a person with direct knowledge of the matter.

SoftBank is currently in talks with BowX Acquisition, a special purpose acquisition company that raised $ 420 million in an IPO in August, over a merger that could value WeWork between $ 8 billion and $ 10 billion. dollars, people familiar with the matter said.

Talks have been active for several weeks and a deal could be announced soon, although someone involved in the negotiations said WeWork could still go for a traditional IPO or direct listing.

The new valuation is said to be a far cry from the $ 47 billion mark WeWork hit in a funding round it secured before the company was criticized by investors for its huge losses, governance questions and disclosures that Neumann personally benefited from a series of transactions.

Neumann would have no role in running WeWork, nor would he have a seat on the company’s board of directors, people briefed on the settlement said. However, he would retain most of his stake in the company.