WeWork sues SoftBank after withdrawal of $3bn deal

Marco Green
April 8, 2020

The legal complaint, filed in DE by WeWork parent The We Company, is also alleging SoftBank breached its fiduciary duty to WeWork's minority stockholders.

In the lawsuit, which was widely expected after the tender was yanked last week, a special committee on the board of WeWork's parent We Co. alleged that SoftBank had breached fiduciary duty to minority shareholders by not following through with the offer.

"Instead of abiding by its contractual obligations, SoftBank, under increasing pressure from activist investors, has engaged in a purposeful campaign to avoid completion of the tender offer", the Special Committee said in a statement.

SoftBank in its statement last week said that WeWork failed to meet a number of those performance requirements, and said that it was within its rights under the tender offer contract to walk away from the deal.

Under the terms of the tender offer proposed in November past year, SoftBank would buy upwards of $3 billion in shares from existing shareholders with the transaction closing at the beginning of April.

The embattled co-working giant is alleging that SoftBank wrongfully pulled out of an agreement to buy $3 billion worth of WeWork shares.

Trustbridge did not immediately respond to a request for comment.

"Nothing in the Special Committee's filing today credibly refutes SoftBank's decision to terminate the tender offer", SoftBank's spokesperson said. SoftBank will vigorously defend this suit.

WeWork sued SoftBank on Tuesday after the Tokyo-based holding company nixed its plan to purchase $3bn in shares of the struggling office-leasing biz from existing shareholders.

WeWork is asking a DE judge for so-called "specific performance", or performance of a contractual duty, so that SoftBank is forced to complete the tender offer, or for damages in an amount to be determined at trial.

Even without the tender offer, SoftBank and its $100 billion Vision Fund now own 52.3% of WeWork. A revised deal with Softbank included a series of transactions including debt financing, accelerated funding, and the purchase of shares.

WeWork told bond investors last month that it had $4.4 billion in cash and cash commitments as of the end of December, and would be able to weather the economic downturn. Of the tender offer, $450 million is now allocated to current and former employees, according to a person with knowledge of the matter.

SoftBank and its Vision Fund have invested more than $14.25bn in WeWork to date, including $5.4bn since October 2019.

Other reports by Click Lancashire

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