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.
The Rev. Al Sharpton is set to lead a protest march on Wall Street to urge corporate America to resist the Trump administration’s campaign to roll back diversity, equity and inclusion initiatives. The New York civil rights leader will join clergy, labor and community leaders Thursday in a demonstration through Manhattan’s Financial District that’s timed with the anniversary of the Civil Rights-era March on Washington in 1963. Sharpton called DEI the “civil rights fight of our generation." He and other Black leaders have called for boycotting American retailers that scaled backed policies and programs aimed at bolstering diversity and reducing discrimination in their ranks.
President Donald Trump's administration last month awarded a $1.2 billion contract to build and operate what's expected to become the nation’s largest immigration detention complex to a tiny Virginia firm with no experience running correction facilities.
Chipmaker Nvidia is poised to release a quarterly report that could provide a better sense of whether the stock market has been riding an overhyped artificial intelligence bubble or is being propelled by a technological boom that’s still gathering momentum.
Cracker Barrel said late Tuesday it’s returning to its old logo after critics — including President Donald Trump — protested the company’s plan to modernize.
Low-value imports are losing their duty-free status in the U.S. this week as part of President Donald Trump's agenda for making the nation less dependent on foreign goods. A widely used customs exemption for international shipments worth $800 or less is set to end starting on Friday. Trump already ended the “de minimis” rule for inexpensive items sent from China and Hong Kong, but having to pay import taxes on small parcels from everywhere else likely will be a big change for some small businesses and online shoppers. Purchases that previously entered the U.S. without needing to clear customs will be subject to the origin country’s tariff rate, which can range from 10% to 50%.
Southwest Airlines will soon require plus-size travelers to pay for an extra seat in advance if they can't fit within the armrests of one seat. This change is part of several updates the airline is making. The new rule starts on Jan. 27, the same day Southwest begins assigning seats. Currently, plus-size passengers can pay for an extra seat in advance and later get a refund, or request a free extra seat at the airport. Under the new policy, refunds are still possible but not guaranteed. Southwest said in a statement it is updating policies to prepare for assigned seating next year.
Cracker Barrel is sticking with its new logo. For now. But the chain is also apologizing to fans who were angered when the change was announced last week.
Elon Musk on Monday targeted Apple and OpenAI in an antitrust lawsuit alleging that the iPhone maker and the ChatGPT maker are teaming up to thwart competition in artificial intelligence.
