WeWork in crisis as SoftBank terminates its £2.41 billion tender offer

By:
on Apr 2, 2020
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  • SoftBank refuses to purchase £2.41 billion worth of additional WeWork shares.
  • WeWork's special committee says it will consider litigation against SoftBank.
  • The office-sharing company highlights £3.54 billion in cash to withstand COVID-19.

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In
its statement on Thursday, SoftBank Group Corp (TYO:9984) announced to have
terminated its tender offer worth £2.41 billion directed at purchasing WeWork’s
additional shares. The deal was originally agreed with shareholders in 2019 after
WeWork’s IPO (Initial Public Offering) failed. The recent move threatens
litigation against SoftBank and expands the financial crisis for the office-sharing
company.  

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The
Japanese multinational conglomerate holding company referred to the ongoing
civil and criminal probes against WeWork for its decision that it said was
targeted at protecting its shareholders. The tech investment firm also
attributed the move to the Coronavirus driven economic challenges, and the
startup’s failure in China concerning the restructuring of its joint venture.   

WeWork
To Consider Litigation Against SoftBank

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WeWork’s
special committee responded to the news and expressed its disappointment in
SoftBank’s decision. The committee also said that it wishes to explore all
legal options at its disposal including litigation.

The
repercussions of SoftBank’s announcement on Thursday include WeWork losing £880
million in debt financing from the Japanese company. It also pushes the
American commercial real estate company further into crisis and jeopardizes its
earnings as countries resort to nationwide lockdowns to minimize the fast
spread of the flu-like virus. WeWork is also currently engaged in drastic
restructuring.

In
Q3, the office-sharing company had posted a massive £1 billion in loss.
Addressing to its investors, the company recently highlighted £3.54 billion in
cash that it said was sufficient to withstand the economic
blow of the ongoing health emergency
.

SoftBank
also highlighted on Thursday that it doesn’t wish to be a part of the rising
civil and criminal investigations that are also scrutinizing WeWork’s financial
activities and its overall dealing with investors.

SoftBank
Closed 2.5% Up On Thursday

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The
Japanese
firm itself is under financial pressure
as a few of its recent tech bets
turned sour. With two of the telecommunications companies on its portfolio,
T-Mobile and Sprint, finalizing their merger on Wednesday, however, the
investment company is expected to see significant gains in the current quarter.

SoftBank’s
announcement was received positively in the stock market as it closed 2.5% up
on Thursday versus a 1.4% decline that was noted in the wider Tokyo index
.N225.

At
£28.19 per share, SoftBank is still trading a little under 20% year to date. The
Japanese conglomerate holding company is currently valued at around £58
billion.

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