SoftBank’s investors pump the brakes on a WeWork takeover

Masayoshi Son's investment vehicle was planning a $16B investment in WeWork, as the co-working company is expected to lose $2B this year

National /
Dec.December 19, 2018 03:30 PM

Masayoshi Son (Credit: Getty Images)

It’s a rare occurrence, but SoftBank’s investors said no.

In this case, it was a majority takeover of WeWork for $16 billion that would have been a step too far. The potential deal, championed by the Japanese investment firm’s head Masayoshi Son, was reportedly squashed by investors concerned about the co-working firm’s astronomical valuation and its potential exposure in the event of a downturn.

The Saudi Arabia and United Arab Emirates sovereign wealth funds, which are majority backers of SoftBank’s $100 billion Vision Fund, reportedly questioned the takeover according to The Wall Street Journal. SoftBank is backing away from the deal as WeWork is forecasted to lose $2 billion this year.

SoftBank has so far committed $8.4 billion to WeWork, including a $3 billion stake announced last month which valued the co-working firm at $45 billion. The Journal reported that Son’s latest planned investment would value the company at $36 billion, and bring the total investment in WeWork by SoftBank and affiliates to $24 billion.

Son will now have to look elsewhere if the deal is to go ahead. His attempts to continue pouring money into WeWork are reminiscent of other bets he has made on small companies that have become industry titans. Those include Uber Technologies and Chinese e-commerce giant, Alibaba.

Under Son’s proposed plan, SoftBank would provide $10 billion to buy out existing outside shareholders, and it would inject $2 billion a year for the next three years, provided WeWork met certain targets. This would also give WeWork CEO Adam Neumann total control of the company. Talks are reportedly ongoing and both WeWork and SoftBank hope that the deal goes ahead early next year as planned.

Traditional real estate firms in the United States have also become wary of the flexible office space giant, and have sought to set up their own companies. Brokerage CBRE launched co-working company Hana and landlord Tishman Speyer has promoted its venture, Zo. [WSJ] — David Jeans 


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
258 8th Avenue (Google, Target)

Target planning yet another NYC store in Chelsea

Target planning yet another NYC store in Chelsea
Churchill Real Estate's Justin Ehrlich and 381 Broadway (Google Maps)

Two-year Tribeca foreclosure saga continues with lawsuit over $20M

Two-year Tribeca foreclosure saga continues with lawsuit over $20M
Compass CEO Robert Reffkin (Getty; iStock)

Compass eyes IPO in 2021

Compass eyes IPO in 2021
Adam America's Omri Sachs and Dvir Cohen with 2503-2509 Broadway (Google Maps; Adam America)

Adam America secures $63M in financing for Upper West Side project

Adam America secures $63M in financing for Upper West Side project
Convene CEO Ryan Simonetti (Convene)

Convene closes Manhattan locations as corporate events fail to return

Convene closes Manhattan locations as corporate events fail to return
New York City District Council of Carpenters’s Monitor Glen McGorty (iStock; LinkedIn)

NYC carpenters union changes how it roots out mob ties

NYC carpenters union changes how it roots out mob ties
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...