Softbank is coming to the financial rescue for WeWork. The two companies announced a deal late Tuesday night that will give the Japanese technology conglomerate an 80 percent ownership stake in WeWork, the former Wall Street darling that now finds itself embroiled in bedlam.
Under the agreement, Softbank will inject WeWork — officially called The We Company — with $5 billion of new financing and accelerate its existing commitment to provide $1.5 billion next year. The funding will provide WeWork with "significant liquidity to execute its business plan" and fuel the company's path to profitability, a joint statement read. The deal also included at $3 billion tender offer to existing shareholders.
Adam Neumann, WeWork's embattled founder and former CEO, will also step down from the company's board and give up his shares. The deal did not disclose the financial details of Neumann's removal, but earlier reports put the buy out at up to $1.7 billion. Neumann will stay active as a board observer.
"It is not unusual for the world's leading technology disruptors to experience growth challenges as the one WeWork just faced," said Masayoshi Son, Softbank's chairman and CEO. "Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support."
WeWork, which operates 528 co-working spaces in 29 countries, first came under pressure in August after the company attempted to go public. The initial public offering was quickly postponed after investors began scrutinizing the company's debt, financial decisions, and questionable governance practices.
George Schultze, a hedge fund manager and the founder of Schultze Asset Management, told Cheddar Tuesday that WeWork has no path forward "unless Softbank keeps throwing more money into the oven for burning."
Softbank's shares were down 2.5 percent on the Tokyo Stock Exchange at close on Wednesday local time.
Artie Minson and Sebastian Gunningham, the current co-CEOs of WeWork, said that Softbank's funding will give the company a "platform for growth and capital returns" for investors and employees. "We will have the flexibility to continue streamlining our assets and stabilizing the business without sacrificing our global brand and exceptional products," the co-CEOs said in a statement.
Softbank also announced that Marcelo Claure, the firm's current chief operating officer, will be appointed to the position of executive chairman of the board of directors of WeWork.
Nvidia on Wednesday became the first public company to reach a market capitalization of $5 trillion. The ravenous appetite for the Silicon Valley company’s chips is the main reason that the company’s stock price has increased so rapidly since early 2023.
Chris Williamson, Chief Business Economist at S&P Global, breaks down September’s CPI print and inflation trends, explaining what it means for markets.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
