SoftBank Group Corp. agreed to spend more than $10 billion to take over U.S. office-space sharing startup WeWork on Tuesday, doubling down on an ill-fated investment and paying off its co-founder Adam Neumann to relinquish control, Reuters reported. The deal represents a stunning reversal of fortune for WeWork, as well as its largest shareholder, SoftBank, which has committed more than $13 billion in equity to a company that is now valued at just $8 billion. The bailout comes as SoftBank Chief Executive Masayoshi Son is seeking to convince investors to participate in the Japanese company’s second mammoth Vision Fund, for which he is seeking to raise $108 billion. To stem WeWork’s bleeding, SoftBank will need to reverse its widening losses and find a way to make it profitable. The rescue financing also marks a dramatic fall from grace for Neumann, who as recently as last month was preparing to take WeWork public as chief executive after attaining a $47 billion valuation for it in January. While WeWork employees now face the prospect of thousands of layoffs, Neumann has secured a $685 million side deal with SoftBank to step down from the board of WeWork’s owner, The We Company. Neumann faced margin calls on his personal borrowings against WeWork’s private stock as a result of the collapse of the company’s valuation. SoftBank has agreed to extend to him a $500 million loan to repay a credit line from JPMorgan Chase & Co., as well as pay him a $185 million fee for a four-year assignment as a consultant to WeWork.
