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SoftBank to take 80% stake in WeWork with $9.5B funding package

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Capital Markets View – January 2021


SoftBank to take 80% stake in WeWork with $9.5B funding package

SoftBank Group Corp. will own approximately 80% of WeWork Cos. Inc. as part of a $9.5 billion funding package that includes a tender offer and additional investment in the cash-strapped coworking space provider.

The Japanese conglomerate said it plans to launch an up to $3 billion tender offer for existing WeWork shares in the fourth quarter and committed to invest an additional $5 billion in the company. It also agreed to expedite an existing $1.5 billion funding commitment to The We Co. unit, giving the company the liquidity it needs to carry out its business plan and generate profits.

Closing of the $19.19-per-share takeover offer will be subject to regulatory approvals and other customary closing conditions. Meanwhile, the additional investment will comprise $1.1 billion in secured senior notes, $2.2 billion in unsecured notes and a fresh $1.75 billion credit line.

The rescue deal will give SoftBank a fully diluted economic ownership of approximately 80% in WeWork, but the Japanese group will not hold a majority of voting rights and will not control the company, according to a joint Oct. 22 release.

"WeWork will not be a subsidiary of SoftBank. WeWork will be an associate of SoftBank," the companies said.

SoftBank COO Marcelo Claure will be appointed as WeWork's executive chairman as part of the deal, while Adam Neumann, WeWork's former CEO and founder, will assume the role of board observer.

SoftBank appointed Raine Group LLC as its lead financial adviser and Weil Gotshal & Manges LLP and Morrison Foerster LLP as its legal advisers. WeWork tapped Skadden Arps Slate Meagher & Flom LLP as its legal adviser and Perella Weinberg Partners LP as its financial adviser.