Just days after SoftBank announced that it would not consummate its $3 billion tender offer for WeWork shares that would have bought out some of the equity held by the company’s co-founder Adam Neumann along with venture capital firms like Benchmark and many individual company employees, the company is now retaliating, suing SoftBank over alleged breach of contract and breach of fiduciary duty. TechCrunch reports: In a press statement this morning, the Special Committee of WeWork’s board said that it “regrets the fact that SoftBank continues to put its own interests ahead of those of WeWork’s minority stockholders.” WeWork’s Special Committee argues that SoftBank already received the benefits of the contract it signed last year, which included board control provisions. It’s demanding that SoftBank either complete the transaction, or offer cash to cover damages related to its scuttling of the deal. Under the terms of the tender offer proposed in November last year, SoftBank would buy upwards of $3 billion in shares from existing shareholders with the transaction closing at the beginning of April. As part of the terms of that contract, the co-working company and SoftBank agreed to a set of performance milestones that WeWork agreed to meet in exchange for the secondary liquidity. Such terms are customary in most financial transactions.
SoftBank in its statement last week said that WeWork failed to meet a number of those performance requirements, and said that it was within its rights under the tender offer contract to walk away from the deal. WeWork’s financials have been rocked by the global pandemic of novel coronavirus, which has seen the company’s co-working facilities mostly closed worldwide as part of public health mandates for social distancing. Given the disagreement between the parties, a lawsuit was all but inevitable.
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