In what is a classic case of Fall of the giants SoftBank is taking control of WeWork, in an attempt to plug the gaps in a company that appears to be beleaguered from all sides. The company which was once valued at $47 Bn, is going for around $7.5 Bn as it’s investor attempts to take a much more active role before the company loses any more of its value.
When does a $7.5 Bn valuation not sound impressive? When you have worked backwards to it from almost $50 Bn. And yes, the $7.5 Bn figure marks a sharp decline from the $47 Bn valuation that the company enjoyed in its heyday despite making a $1 Bn loss. However, WeWork should actually be thankful that SoftBank is stepping in at all at this point, as reportedly, the company is only weeks away from burning through all of its cash.
Meanwhile, the deal could see the light of the day as early as tomorrow. If the rumor mill has it right, SoftBank could infuse around $4-$5 Bn in the company for new and existing stock. With SoftBank Group Corp. taking control, International chief executive officer Marcelo Claure is expected to help guide WeWork’s recovery.
SoftBank’s decision to step in comes almost 4-weeks after CEO Adam Neumann stepped down from the helm of the company to take a non-executive chairman role. While resigning, he had made the following statement, covering some of his company’s key achievements:
As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade. Our global platform now spans 111 cities in 29 countries, serving more than 527,000 members each day. While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive. Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.
The company is currently being run by interim co-CEOs, vice chairman Sebastian Gunningham and COO Artie Minson. Neumann was far from being the only departure and the company is suffering from lack of experienced executives at key positions, as many key figures in the company including CMO Robin Daniels, have been jumping ship one after the other.
Meanwhile, SoftBank can be expected to cut down the sky-high costs at the company, bring in some (or a lot?) of restructuring, and work towards the company’s 2020 IPO plans.