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SoftBank

WeWork sues SoftBank for reneging on $3bn tender offer

Lawsuit seeks damages for breach of contract and fiduciary duty

WeWork's lawsuit seeks the completion of the tender offer or compensatory damages from the investor.   © Reuters

NEW YORK -- WeWork filed a lawsuit Tuesday against SoftBank Group that accuses the Japanese investment powerhouse of breach of contract after it walked away from its promised $3 billion tender offer.

The legal complaint, filed in Delaware by WeWork parent The We Company, is also alleging SoftBank breached its fiduciary duty to WeWork’s minority stockholders. 

Referring to SoftBank's backtracking as "buyer's remorse," the lawsuit seeks the completion of the tender offer or compensatory damages from the investor.

SoftBank, which unveiled the tender offer as part of a $9.5 billion bailout package last October following WeWork's botched attempt to go public, said last week that its offer had expired, as "certain conditions to the tender offer were not satisfied."

It cited a failure to obtain necessary antitrust approvals, a failure to sign and close the roll-up of a China joint venture, pending criminal and civil investigations facing WeWork, as well as restrictions against its operations due to global lockdowns during the COVID-19 outbreak. 

WeWork fired back Tuesday, claiming that SoftBank, "under increasing pressure from activist investors, has engaged in a purposeful campaign to avoid completion of the tender offer."

In a statement, the coworking company alleged that SoftBank "tried to thwart the roll-up of WeWork's joint venture in China" by pursuing an alternative transaction with a key minority investor in the joint venture.

"This, and SoftBank's other claims related to its failure to complete the tender offer, are therefore either disingenuous or irrelevant to Softbank's contractual and other obligations," said WeWork's special committee, which also pointed to the benefits SoftBank received from the October agreement, including broad control over WeWork.

A spokesperson for SoftBank shot back, reiterating that several of the conditions agreed to last October by WeWork, its founder Adam Neumann, SoftBank and SoftBank Vision Fund were not met as of April 1. 

"Nothing in the Special Committee’s filing today credibly refutes SoftBank’s decision to terminate the tender offer," the statement said.

"Their filing today is a desperate and misguided attempt now to rewrite that agreement and to rewrite the history of the past six months."

But it added that "SoftBank remains fully committed to the success of WeWork, and the five-year business and strategic plan to secure its profitable future."

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