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WeWork co-founder Neumann sues SoftBank over failed tender offer

Published 05/04/2020, 06:59 PM
Updated 05/04/2020, 10:05 PM
© Reuters. FILE PHOTO:  Adam Neumann, chief executive officer of U.S. co-working firm WeWork, speaks during a signing ceremony in Shanghai

© Reuters. FILE PHOTO: Adam Neumann, chief executive officer of U.S. co-working firm WeWork, speaks during a signing ceremony in Shanghai

(Reuters) - WeWork co-founder Adam Neumann filed a lawsuit against Japan's SoftBank Group Corp and its Vision Fund on Monday for terminating a $3 billion tender offer to the office-sharing startup's shareholders.

The tender offer was part of a $9.6 billion rescue financing package that SoftBank agreed with WeWork in October and gave it control of the company. Since then, WeWork's occupancy rates have plummeted amid the COVID-19 pandemic.

In April, SoftBank said it would not press ahead with the tender offer because several pre-conditions had not been met, frustrating WeWork's minority shareholders, who were expecting a payout. The investors included Adam Neumann.

"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 filed in a Delaware Court said.

An independent special committee, comprised of Bruce Dunlevie, who is a general partner at WeWork shareholder Benchmark Capital, and Lew Frankfort, former CEO of luxury handbag maker Coach, had also filed a lawsuit, calling SoftBank's decision to terminate the tender offer wrongful.

SoftBank's lawyers had questioned the special committee's right to represent minority shareholders, an assertion the committee rejected last month.

"In real time, SBG (SoftBank) and SBVF (SoftBank Vision Fund) are abusing their control of WeWork in an effort to stop the special committee's meritorious lawsuit from being heard," the lawsuit said.

Meanwhile, SoftBank's Chief Legal Officer Rob Townsend called Neumann's claims "meritless". Under the terms of the agreement, he said, SoftBank had "no obligation" to complete the tender offer in which Neumann – the biggest beneficiary – sought to sell nearly $1 billion in stock.

© Reuters. FILE PHOTO:  Adam Neumann, chief executive officer of U.S. co-working firm WeWork, speaks during a signing ceremony in Shanghai

Latest comments

Worst investment Softbank ever made!
equally discussing as ********Newman is a wasteful and perverted legal and business system that allows and ultimately create this vomiting mindset where any piece of ********(read ********Newman) can start a legal fight that has no reasonable common sense. As early as such legal proceeding may be dismissed (you cannot bet all our coins it will be by the way) will always be way too late. We truly are in good shape here.
Well said
the guy took billions from SoftBank, used company money to benefit his own personal asset, failed ipo, got fired due to bad work ethic, now turning around suing the person who made him into what he is today. lmao! can anyone get anymore disgusting than this guy?
Agreed, this guy is a fraud and a total con artist.
he is already rich from the scheme he pulled. he's going to a new low. lmao. he has no idea how lucky he has been and could walk away rich with whatever dignity left but instead he's defining a new low in his chapter.
They came in, cleaned the house, pushed for ipo to make a profit. When they see they can not, they run. Sure, Sue them.
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