Posted on 10/22/19
| News Source: FOX Business
WeWork, the beleaguered co-working startup, chose a rescue offer from investor SoftBank over a competing proposal from JPMorgan Chase, the Wall Street Journal reported.
The deal would pay co-founder Adam Neumann nearly $1.7 billion, ending most of this ties with the company, the Journal said, citing sources it didn't identify. The transaction is expected to value WeWork at about $8 billion, down from an earlier valuation of $47 billion.
WeWork, which was planning to begin public sales of its stock last month, was forced to pull the offering despite bankers at Goldman Sachs pitching valuations as high as $90 billion — after investors began studying its high debt levels, massive losses and how quickly it was burning through cash.
Many prospective stock-buyers were dismayed by the numbers, a sour note after savvy, upbeat marketing pitches by Neumann, who subsequently faced claims of heavy personal spending with little oversight from the company's board.
SoftBank, which already controlled about a third of the startup, plans to buy $1 billion of stock from Neumann, who was previously forced to relinquish the role of CEO, the Journal reported. The Japanese firm will also pay him a $185 million consulting fee and provide a loan of about $500 million to repay credit extended by JPMorgan. Read more at FOX Business