Japan-based Softbank Group Corp is ready to buy a controlling stake in WeWork Companies Inc, providing the shared office space start-up desperately needed funding at a slashed valuation, a source said on Monday.
Softbank is ready to invest an additional US$4 billion to US$5 billion in WeWork, taking a majority stake in the New York company while valuing it at US$8 billion overall, the source said, asking not to be identified.
WeWork — which declined to comment on the issue — had been valued at more than US$47 billion earlier this year.
Photo: AFP
The Softbank proposal includes offering to buy more than US$1 billion in shares of WeWork from existing investors and employees, among them cofounder Adam Neumann.
Investment bank JPMorgan Chase & Co, which already has an interest in WeWork, was expected to have a debt financing plan for the start-up’s board of directors to consider at a meeting yesterday, the source said.
WeWork needs to raise at least US$3 billion to cover its financing needs through the end of the year, sources said.
If WeWork opts for the Softbank offer, the Japanese conglomerate headed by billionaire Masayoshi Son would own more than 80 percent of the start-up.
The deal would also limit the influence of Neumann.
Neumann stepped down as chief executive last month amid questions over perceived self-dealing between his personal assets and WeWork, and over unconventional personal conduct, including drug use.
The company also scotched a plan to go public for the foreseeable future, ending one key financing route.
Ratings agencies have downgraded WeWork’s bonds to “junk” status due to a cash crunch.
The company reported US$1.9 billion in losses last year, as it expanded rapidly.
The start-up, which launched in 2010, has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.
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