WeWork co-founder Adam Neumann sues SoftBank over $3bn deal
Adam Neumann, WeWork’s co-founder and former chief executive, has filed a lawsuit against Japan’s SoftBank, accusing it of abusing its power in order to terminate an agreement to buy $3bn (£2.4bn) of stock from him and other early investors in the office-sharing company.
SoftBank, which is run by Japanese billionaire Masayoshi Son who is also WeWork’s biggest investor, announced in early April that it was walking away from the share tender rescue deal hammered out last October to save WeWork from collapse.
It said at the time it had “no choice” but to scrap the rescue deal because WeWork had failed to meet several conditions. It also cited concerns about “multiple, new, and significant pending criminal and civil investigations”.
Neumann would have been the biggest beneficiary of the payouts to minority shareholders, as he was lined up to sell $970m worth of shares.
The lawsuit, filed in a Delaware court, said Softbank and its Vision Fund had let down Neumann and WeWork staff.
“Mr Neumann put his trust in [SoftBank and the Vision Fund] to be stewards of WeWork, which he — and thousands of others — had worked so hard to build,” the lawsuit said.
Neumann had upheld his end of the bargain, according to the filing, while WeWork’s Japanese investors had not.
“The abuses committed by [SoftBank] and SBVF [SoftBank Vision Fund] are so brazen that they have prompted legal action by a special committee of WeWork’s board,” the lawsuit added.
Responding to Neumann’s lawsuit, Rob Townsend, the SoftBank chief legal officer, said: “SoftBank will vigorously defend itself against these meritless claims.”
He added: “Under the terms of our agreement, which Adam Neumann signed, SoftBank had no obligation to complete the tender offer in which Mr Neumann – the biggest beneficiary – sought to sell nearly $1bn in stock.”
Neumann resigned as chief executive last September from the firm he cofounded in 2010, after scrapping plans for a stock market flotation. Investors balked at the company’s sky-high valuation. It had been valued at $47bn, despite losing $3bn in the past three years, but that valuation was slashed to $8bn by the time of the bailout in October.
SoftBank has been losing money on its investments and last week predicted a wider full-year loss of 900bn yen (£6.8bn). It expects to lose £5.3bn from its investment in WeWork alone.