WeWork is not taking SoftBank Group Corp.’s withdrawal of its $3 billion offer lying down.
The New York-based company has filed a lawsuit in the Delaware Court of Chancery alleging the Tokyo multinational conglomerate holding company failed to meet its obligations under the agreement to buy $3 billion in shares of the company that was signed last year, the firm announced Tuesday (April 7).
“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 in a statement.
The complaint, filed by a special committee of the WeWork Board of Directors, alleges SoftBank’s action was a breach of contract and of fiduciary duty to WeWork’s minority stockholders, including hundreds of its current and former employees, CNBC reported.
The deal was announced in October and amended at year’s end.
“… 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,” WeWork said.
The lawsuit alleges SoftBank has already received most of the benefits provided to it under the agreement, including control of the company. SoftBank’s wrongful conduct in failing to complete the deal offer deprives WeWork’s minority stockholders of the liquidity that they were promised, WeWork wrote.
In addition, the company said the signed agreement to purchase did not contain any provision under which SoftBank could cancel the deal based on global events.
WeWork alleges Softbank first tried to kill its joint venture in China, and then claimed that the conditions to withdrawing the tender offer, one of which is the rollup of WeWork’s joint venture in China, were not met.
“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,” WeWork charged.
WeWork was launched a decade ago. At the close of 2018, the company managed more than 43 million square feet of space. But last fall the firm shelved plans for an initial public offering (IPO) and subsequently endured layoffs and a cash crunch.
Last week, reports anticipated legal action after SoftBank withdrew its offer to purchase WeWork amid the fiscal carnage of the ongoing COVID-19 pandemic.
A SoftBank spokesperson could not immediately be reached for comment.