The board of directors of the space-sharing company WeWork has approved the Japanese investment giant Softbank to take control of the real estate startup.
Softbank today received approval from WeWork’s board of directors to take over the joint space company currently in trouble, giving the company’s founder and CEO Adam Neumann close to $ 1.7 billion and cutting off most of his ties with the company, The Wall Street Journal reports.
According to WSJ sources, under the agreement, Neumann is expected to sell $1 billion in shares to the Japanese investment group Softbank, which is controlled by billionaire Masayoshi Son.
Neumann will also receive a $185 million payment for consulting services from Softbank, sources said. Also, Softbank will give Neumann a $500 million line of credit to help him repay loans of the similar amount he received from JP Morgan Bank.
Softbank’s $1 billion share purchase, will be carried out as part of a tender of $3 billion in which Softbank will offer employees and other investors to buy shares of the company.
Neumann will cut most of his ties with the company he founded but will continue to hold shares in the company and serve as an observer on the board. The deal is expected to reflect an $8 billion valuation to the company, less than a fifth of the $47 billion valuation that Softbank invested in the company in January.
WeWork’s board of directors is expected to officially announce the agreement today, but sources have warned that the announcement may be delayed.
Last month, the company was forced to announce the postponement of its plan to make an initial public offering (IPO), a development that led to Neumann’s dismissal from the CEO position.
Since then, parent company We is making desperate efforts to raise cash: The company has put up for sale some of its side business, closed WeGrow Private Elementary School, Neumann’s private jet and plans to lay off thousands of employees starting this month.