Business

WeWork sues Japan’s SoftBank for backing out of deal

WASHINGTON (AFP) – Office-sharing giant WeWork on Tuesday (April 7) sued SoftBank claiming the Japan-based technology investment group breached its contractual obligations by backing out of a US$3 billion (S$4.3 billion) rescue plan.

The lawsuit filed in a US court in Delaware came just days after SoftBank said it was backing out of the plan to purchase WeWork shares to shore up the finances of the struggling sharing-economy giant.

WeWork's board of directors called the SoftBank action "a clear breach of its contractual obligations" under an agreement between the two firms last year as well as a breach of SoftBank's fiduciary obligations to the firm's current and former employees who were to sell their equity.

The complaint alleges SoftBank yielded to pressure from "activist investors" and made the move after it had "received most of the benefits" under the deal, including control of WeWork's board.

WeWork is asking the court to force SoftBank to live up to the agreement or pay damages.

Last week, SoftBank said it was terminating the agreement, claiming WeWork failed to live up to its obligations and cited "multiple, new, and significant pending criminal and civil investigations" surrounding WeWork and its co-founder Adam Neumann.

Neumann was to have received an estimated US$1 billion from the SoftBank investment.

The deal also would allocate some US$450 million to current or former WeWork employees who have equity in the group.

A WeWork board special committee said it "regrets the fact that SoftBank continues to put its own interests ahead of those of WeWork's minority stockholders."

SOFTBANK HOLDS FIRM

SoftBank said in a statement it would "vigorously defend" its position that it has no legal obligation to proceed with the share purchase, known as a tender offer.

"Nothing in the special committee's filing today credibly refutes SoftBank's decision to terminate the tender offer," a SoftBank spokesman said in an email.

"Their filing today is a desperate and misguided attempt now to rewrite that agreement and to rewrite the history of the past six months."

The move by SoftBank marked a dramatic turn of events at troubled WeWork, once hailed as a shining unicorn valued at US$47 Read More – Source