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WeWork is accepting a financial rescue package that hands control of the company to Japanese tech giant SoftBank and pushes aside co-founder Adam Neumann and his grandiose vision of changing the world through communal working.
WeWork said in a statement that Japanese tech conglomerate SoftBank will infuse the We Company with more than $5 billion in urgently needed capital.
Neumann - Ties - Company
Neumann would walk away with nearly $2 billion to sever most of his ties to the company.
"SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work. WeWork is at the forefront of this revolution," SoftBank's founder Masayoshi Son said in a statement.
Vision - SoftBank - Company - Capital - Infusion
"Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support. We remain committed to WeWork, it's employees, its member customers and landlords," he said.
WeWork has been scrambling for cash since its attempt to enter the stock market floundered last month, a stunning fall from grace for a company that has until recently been considered one of the most highly valued start-ups in the U.S.
Deal - Lifeline - Business - Model - Wall
The deal throws WeWork a lifeline as it attempts to turn around a money-losing business model that had repelled potential Wall Street investors. But it comes at a steep cost for SoftBank, which already owns one-third of WeWork and has sunk $10 billion into the company.
SoftBank's takeover would value WeWork at $8 billion, a fraction of the $47 billion valuation SoftBank had assigned the company in its last round of financing in January.
Contours - Deal - SoftBank - Money - WeWork
The contours of the deal mean SoftBank now has more money invested in WeWork than the company is worth.
"This is where the math gets confusing because they've put in more money than the valuation of the company," said Larry Perkins, founder and CEO of SierraConstellation Partners,...
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