Group Corp is taking control of beleaguered WeWork, part of a rescue financing plan that will see former CEO Adam Neuman sever most of his remaining ties with the company he co-founded, according to people familiar with the matter.
The eleventh-hour deal throws a lifeline to WeWork parent We Co, which was on the verge of running out of cash after a failed public offering in September. By salvaging one of its biggest investments, SoftBank
will give a second chance to WeWork to start over under new ownership. It also tosses a buoy to Neumann, who will give up his board seat and walk away with as much as $1.2 billion as well as a $500 million credit line from SoftBank, after it pushed him out as chief executive officer last month.
Neumann is allowed to sell slightly less than $1 billion of stock to the Japanese conglomerate as part of the deal, said the people, who asked to remain anonymous because the agreement hasn’t been announced. He’ll remain as a board observer and can assign two board seats, one of the people said. Neumann will also get a roughly $185 million consulting fee. His net worth would still be at least $1 billion, according to calculations by the Bloomberg Billionaires Index.
WeWork chose the offer from SoftBank, which already owns about one-third of the company, over a competing proposal from JPMorgan Chase & Co. The deal, which values the office-sharing startup at about $8 billion before any new capital from SoftBank, marks a shocking fall from grace for a business emblematic of the latest tech boom that had been valued as recently as January at $47 billion. As part of SoftBank’s plan, one of its executives, Marcelo Claure, will take over as chairman of WeWork’s board, one of the people said. WeWork appointed Artie Minson and Sebastian Gunningham as co-CEOs last month after investors pushed back against the IPO.
and JPMorgan declined to comment. WeWork couldn’t immediately be reached. Dow Jones earlier reported details of the deal.