Legal

WeWork’s Ex-CEO Sues SoftBank Over Aborted $3B Deal

WeWork’s Ex-CEO Sues SoftBank Over Aborted $3B Deal

WeWork Co-founder Adam Neumann has launched a legal battle with his company’s biggest investor, SoftBank Group Corp., charging that it has wrongfully reneged on a bailout deal.

Neumann, WeWork’s former CEO, would have been the big winner in the $3 billion deal, which included buying stock from shareholders and employees, notably him. Under the agreement, Neumann left the company’s board and was allowed to sell as much as $970 million in stock.

New York-based WeWork is a commercial real estate company that provides shared offices and services for tech startups and other companies. WeWork’s planned initial public offering (IPO) flopped last year.

Neumann accuses SoftBank and its Vision Fund of using legal pretexts to scuttle the $3 billion agreement as the conglomerate hit economic woes, according to a Bloomberg reportRob Townsend, the chief legal officer at SoftBank, said Neumann’s lawsuit was “meritless.” “Under the terms of our agreement, which Adam Neumann signed, SoftBank had no obligation to complete the tender offer,” Townsend added.

Last month, WeWork itself sued Softbank over the same issues, as reported by PYMNTS. The complaint charged SoftBank with breach of contract and fiduciary duty to WeWork’s minority stockholders, including hundreds of its current and former employees.

“Instead of abiding by its contractual obligations, SoftBank, under increasing pressure from activist investors, has engaged in a purposeful campaign to avoid completion of the tender offer,” WeWork said at the time. “SoftBank first tried to thwart the roll-up of WeWork’s joint venture in China, and then claimed that the conditions to close the tender offer, one of which is the roll-up of WeWork’s joint venture in China, were not met.”

The lawsuit alleges that SoftBank has already received most of the benefits provided to it under the agreement, including control of the company. WeWork charged that other claims related to SoftBank’s reneging on the deal are “either disingenuous or irrelevant to SoftBank’s contractual and other obligations.”

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