The battle between WeWork and SoftBank is over.
The beleaguered co-working giant and its co-founder and former CEO, Adam Neumann, have reached a legal settlement with SoftBank Group, Bloomberg News reported, heading off a trial that was set to begin on March 4. The agreement will firm up the Japanese conglomerate’s control over WeWork, while giving Neumann a financial windfall on his way out.
SoftBank COO Marcelo Claure, who also serves as WeWork’s executive chairman, said in a statement to the publication that this settlement shows all parties “doing what is best for the future of WeWork.”
“With this litigation behind us, we are fully focused on our mission to reimagine the workplace and continue to meet the growing demand for flexible space around the world,” he said.
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The settlement allows Neumann to cash out about $480 million in stock to SoftBank, while requiring him to stay away from his role on the WeWork board for a year. SoftBank will also pay Neumann $50 million to cover legal fees and additional $50 million as part of a promised non-compete fee. Neumann also gets a five-year extension on a $430 million loan from SoftBank.
The lawsuit, filed in the Delaware Court of Chancery by WeWork and Neumann against SoftBank, was heading to a trial, where Judge Travis Laster was slated to hear evidence about how the WeWork stock deal collapsed.
Shortly after WeWork’s spectacular failure of going public in 2019, SoftBank had agreed to buy $3 billion in stock from WeWork investors, including about $1 billion from Neumann. But in April 2020, the company, led by Masayoshi Son, declined to complete the transaction.
The lawsuit alleged SoftBank withdrew the offer because of “buyer remorse” due to the pandemic. SoftBank objected, saying the deal was pulled because WeWork was unable to meet part of the deal’s conditions. [Bloomberg News] — Akiko Matsuda