- Proposals to bail out WeWork are due on Monday, and the board will meet on Tuesday to evaluate its options. Both offers will value WeWork at $8 billion or under, a far cry from its $47 billion January valuation.
- SoftBank’s offer is expected to have some more favorable terms for WeWork and co-founder Adam Neumann than what JPMorgan could line up with its group of investors.
- The embattled office company, whose valuation was once as high as $47 billion just a few months ago, was set to run out of money next month.
- WeWork had planned to raise billions from going public this fall, but its initial public offering was shelved after investors raised questions about its business model and leadership.
- For more WeWork stories, click here.
WeWork’s board will meet Tuesday to evaluate rescue proposals from JPMorgan and SoftBank due Monday, a person with knowledge of the negotiations said.
A deal with SoftBank would value the company at $7.5 billion to $8.5 billion, according to CNBC. JPMorgan’s valuation would likely be lower, a source told Business Insider. Since all of the proposals have not been submitted, deal terms may still change, one of the people said.
Both proposals are a far cry from the $47 billion the company was valued at just a few months ago. WeWork’s decision will cap a tumultuous autumn that saw co-founder Adam Neumann ousted and his successors scramble to keep the company afloat.
SoftBank – WeWork’s largest investor – offered to lend $5 billion to WeWork and accelerate a $1.5 billion equity investment planned for next year, reported the Wall Street Journal. SoftBank would also offer to buy $1 billion in stock from existing investors. Softbank’s offer is expected to have some more favorable terms for WeWork and Adam Neumann than what JPMorgan could line up with its group of investors in an all-debt deal, a source said.
Representatives for WeWork, JPMorgan, and SoftBank declined to comment.
If WeWork picks SoftBank's proposal, the latter's chief operating officer, Marcelo Claure, would continue to be involved with WeWork management. Claure, the former CEO of Sprint, had been working with about 20 SoftBank employees to evaluate WeWork's global leases and real estate.
Claure would take over Neumann's role as chairman and would lead a search for outside leadership, which could include a new CEO to replace the current co-CEOs, the Wall Street Journal reported.
WeWork earlier this year was in talks to borrow $6 billion from banks, a deal contingent on raising at least $3 billion in a public float. But after the company released its IPO filing in mid-August, investors, analysts, and the media highlighted problems with its business model, conflicts of interest, and leadership. Six weeks later, WeWork's board of directors ousted controversial CEO Adam Neumann and replaced him with two co-CEOs, who shelved the IPO indefinitely.
Rescue plans
Co-CEOs Artie Minson and Sebastian Gunningham immediately turned their attention to rescuing WeWork, which didn't have enough money to get through November, according to reports. They looked to sell some of WeWork's acquisitions and the company's corporate jet; lay off up to a quarter of the company's workforce; wind down non-core businesses like WeGrow, its educational arm; ax members of Neumann's inner circle; and line up billions in funding.
WeWork's seven-member board tapped directors Bruce Dunlevie and Lew Frankfort to form a two-man committee to evaluate the plans from SoftBank and JPMorgan, Reuters reported. Dunlevie is a general partner at WeWork investor Benchmark Capital, while Frankfort was the CEO of handbag company Coach.
The pair were advised by investment bank Perella Weinberg Partners and law firms Skadden, Arps, Slate, Meagher & Flom and Wilson Sonsini Goodrich & Rosati, Reuters said.
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