In a statement on Wednesday, SoftBank called the lawsuit “a desperate and misguided attempt” to rewrite last year’s agreement, emphasizing again that the share purchase was subject to certain conditions.
Last week, SoftBank listed several ways that WeWork failed to fulfill conditions required to complete the tender offer, including the existence of pending criminal and civil investigations into the office sharing company, global restrictions related to Covid-19 that are affecting WeWork’s operations and the failure to restructure a joint venture in China.
WeWork’s special board is pushing back, saying in its lawsuit that SoftBank was facing an “increasingly dire” financial situation and took “desperate” actions to back out of the share buyout, including torpedoing the restructuring of the Chinese joint venture.
But just because SoftBank is facing financial stress and pressure from activist investors doesn’t mean it can abandon the share buyout, according to the special committee of WeWork’s board.
“SoftBank’s failure to consummate the tender offer is a clear breach of its contractual obligations … as well as a breach of SoftBank’s fiduciary obligations” to WeWork’s stockholders, the special committee said in a statement.
The biggest loser in SoftBank’s about-face is Adam Neumann. The October agreement had included an offer to buy up to $975 million worth of the WeWork founder’s shares.
SoftBank last week said that Neumann, his family and Benchmark Capital would have benefited the most from the share buyback — together, their equity made up “more than half of the stock tendered in the offering,” according to SoftBank.