Only a few days after SoftBank announced its intention not to carry out its $ 3 billion takeover bid for WeWork shares which would have bought back part of the shares held by the company’s co-founder, Adam Neumann , as well as by venture capitalists such as Benchmark and many of the company’s employees, the The company has now retaliated, suing SoftBank for alleged breach of contract and breach of fiduciary duty.
In a press release this morning, the special committee of WeWork The board of directors has said it “regrets that SoftBank continues to put its own interests ahead of the interests of minority shareholders in WeWork.” The WeWork Special Committee maintains that SoftBank has already received the benefits of the contract it signed last year, which included provisions for the control of boards of directors. It requires SoftBank to complete the transaction or offer money to cover the damage related to its scuttling of the transaction.
Pursuant to the takeover offer proposed in November of last year, SoftBank would buy more than $ 3 billion in shares from existing shareholders with the closing of the transaction in early April. As part of this agreement, the joint venture and SoftBank have agreed on a set of performance milestones that WeWork has agreed to meet in exchange for secondary liquidity. These terms are common in most financial transactions.
In its statement last week, SoftBank stated that WeWork had not met a number of these performance requirements, and stated that it was within its rights under the offer contract to withdraw of the agreement. WeWork’s finances have been shaken by the global pandemic of the new coronavirus, which has seen the company’s co-working facilities closed for the most part worldwide under public health mandates for social distancing .
Given the disagreement between the parties, a trial was almost inevitable.
SoftBank is the largest shareholder in WeWork, and if the tender offer had been concluded, the Japanese telecommunications conglomerate would have owned around 80% of the co-working company.
The lawsuit has been filed with the Delaware Chancery Court. WeWork is more officially known as The We Company.