WeWork is going to take legal action against SoftBank, a Japanese company for bailing on $3 billion share acquisition and accusing the firm of creating lame excuses to withdraw from the plan, as financial pressure soar and the novel coronavirus pandemic worsens. The offer of the tender, a part of a rescue package settled to late 2019 when spoiled IPO of WeWork left it teetering on the edge of bankruptcy – until the conglomerate holding company stepped in with the bailout, worth around ten billion dollars at that time.
WeWork is suing SoftBank for abandoning a $3 billion share buyout and accusing the Japanese company of inventing reasons to back out of the plan https://t.co/HKctR88WJT
— CNN Business (@CNNBusiness) April 8, 2020
WeWork filed the lawsuit on Tuesday in the Delaware Court of Chancery, the special committee of the board of WeWork said SoftBank as well as its CEO Masayoshi now suffered from purchaser’s guilt. On Wednesday, in a statement, SoftBank called the charge a despairing and foolish attempt to modify the agreement of 2019, stressing again that the share acquiring relates to specific circumstances.
The previous week, SoftBank listed numerous ways that WeWork was unable to accomplish circumstances mandatory to complete the tender offer. Including the presence of pending civil and criminal investigations into the office-sharing firm, worldwide restrictions due to the novel coronavirus that affecting the operations of WeWork as well as the failure to reorganize a joint venture in China.
SoftBank faced Pressure due to mounting losses
The special board of WeWork is pushing back with their statement that in its lawsuit that SoftBank was facing a progressively terrible economic situation and took wild actions to withdraw the share buyout, including spoiling the restructuring of the Chinese joint venture. SoftBank faces huge pressure due to the growing losses in the $100 billion Vision fund of Son that drag down the profits of SoftBank. The COVID-19 epidemic also reversed a substantial chunk of the Vision Fund’s paper profits in public firms like Uber.
Last week, SoftBank said that Neumann, his family as well as Benchmark Capital would assist the most from the buyback share – together, their fairness made up over half of the stock tendered in the offering, according to the officials of SoftBank.