The founder of WeWork has agreed to a 50% reduction in the amount he will receive

A settlement was reached in a lawsuit filed by Adam Neumann against Softbank, in which the founder of WeWork agreed to a 50% reduction in the amount of money he would receive from the Japanese giant, which is the main investor in the company. The end of the legal dispute will pave the way for a planned IPO of the office space rental company.

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Softbank announced yesterday (Friday) that it has reached an agreement with Neumann and two other directors at WeWork, who sued her after she refused to pay $ 3 billion for their shares, as promised in the bailout package she gave the company.

Right: Neumann and Son Right: Neumann and Son

The arrangement was reached 18 months after the failed attempt to make a first public offering (IPO) at the end of which the company was on the verge of Bankruptcy. Neumann was also required to resign from his position as CEO.

Under the terms of the settlement, Softbank will pay $ 1.5 billion to buy shares of Neumann, WeWork employees and other investors, including the Benchmark Capitol venture capital fund, the Financial Times reports on people involved. Under the arrangement, Neumann will be able to sell shares worth $ 500 million.

Softbank originally planned to acquire a double amount of shares, as part of a billion-dollar bailout deal it gave the company in October 2019, but later withdrew from the undertaking claiming that WeWork did not meet all the required conditions.

Marcello Clore, WeWork’s current CEO, said the arrangement “is the result of all parties coming to the table to achieve the best thing for WeWork’s future”.

The settlement of the dispute with Neumann was essential in order to implement Softbank’s plan to merge with WeWork with SPAC in order for it to be able to trade in the capital markets, according to one of its associates. According to him, Softbank is in contact with BowX Acquisition – SPAC, which raised $ 420 million in its first public offering in August, regarding a merger that will give the company a value of between $ 8-10 billion. According to reports, talks have been going on for several weeks and the announcement of a deal is expected in the coming days. However, WeWork may still choose to make a traditional offering.

The current valuation is far from the $ 47 billion valuation achieved by the company in the last round of capital raising before Neumann’s retirement, amid investors’ criticism of the high losses, poor management and exposure of deals that benefited directly with him. Under the emerging arrangement, Neumann will have no role in managing the company and will not have a seat on the board, but he will continue to hold most of his holdings.

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