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WeWork Sues Erstwhile Buyer Over 'Buyer's Remorse'

Claims investor worked to ensure conditions of stock takeover wouldn't be met
By Arden Dier,  Newser Staff
Posted Apr 8, 2020 7:43 AM CDT

(Newser) – WeWork is suing the Japanese bank that offered to save it from insolvency before backing out of a $3 billion stock takeover. In a lawsuit filed Tuesday, the special committee of WeWork's board said SoftBank and CEO Masayoshi Son took "desperate" actions to back out of the tender offer agreed to last October as a result of "buyer's remorse" and an "increasingly dire" financial situation, per CNN. In responding Wednesday, a SoftBank rep reiterated that conditions weren't met and several criminal and civil investigations were now targeting the startup. But the WeWork committee argues SoftBank was aware of those investigations when it signed the agreement on Dec. 27. The committee adds SoftBank went so far as to convince minority investors of its joint venture in China "not to waive certain first refusal and co-sale rights," thereby creating an unmet condition.

"The practical effect of the investors' non-waiver was that the roll-up of ChinaCo could not be completed in accordance with the [Master Transaction Agreement], preventing a condition to the Tender Offer from being satisfied," the lawsuit says, per CNBC. While "SoftBank has already received most of the benefits provided to it under the MTA, including broad control of WeWork and additional economic benefits," WeWork's minority stockholders have been deprived "of the liquidity that they were promised." But a rep for SoftBank notes the equity owned by WeWork founder Adam Neumann, his family, and Benchmark Capital constituted "more than half of the stock tendered in the offering." The lawsuit is a "desperate and misguided attempt" to rewrite the agreement, the rep adds, noting SoftBank has invested more than $5 billion in WeWork since October. (Read more WeWork stories.)

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