SoftBank has withdrawn a $3 billion tender offer for WeWork shares, citing a failure to meet closing conditions.
On Thursday, the Tokyo-based tech giant said the decision to terminate the agreement, signed in October last year, "has ended because certain conditions to the tender offer were not satisfied."
The unfulfilled conditions -- as agreed by SoftBank, the SoftBank Vision Fund, WeWork and its co-founder Adam Neumann -- include a failure to secure necessary antitrust approvals by an April 1 deadline and a failure to close and wrap up joint ventures in Asia.
SoftBank also cited "the existence of multiple, new, and significant pending criminal and civil investigations" that were launched after the original tender offer was signed, as well as the COVID-19 outbreak, which has caused severe disruption for businesses worldwide.
"Given our fiduciary duty to our shareholders, it would be irresponsible of SoftBank to ignore the fact that the conditions were not satisfied and to nevertheless consummate the tender offer," the company said.
SoftBank said the withdrawal of the tender offer would not impact WeWork's current operations, customers, or the "vast majority" of staff.
To date, the company and its Vision Fund has committed over $14.25 billion to WeWork through investment, debt financing, and credit support.
Since originally investing in the company, WeWork has proved to be a financial sinkhole, sending the company into disarray and, together with Uber, being partly responsible for the Vision Fund reporting an operating loss of 225 billion yen in Q3. Valuations for both WeWork and Uber have been cut.
Neumann and other stockholders -- such as Benchmark Capital -- were due to profit from the agreement, as their cuts represented over half of the shares due to be tendered. Current WeWork employees tendered less than 10 percent, according to SoftBank.
A WeWork board committee said the decision was "disappointing" and legal options are being considered, "including litigation."
SoftBank is in a precarious financial position and to shore up cash on hand and attempt to reach a more stable footing, the company recently announced a $41 billion share buyback scheme. The firm's board approved the move, which will see assets sold off and up to $18 billion in common stock bought back.
The balance will be used for bond buybacks, debt reduction, and to boost existing cash reserves. SoftBank's scheme builds upon a $4.8 billion buyback scheme announced in March.
On Wednesday, SoftBank announced a joint venture with KDDI to develop 5G technologies. The JV, named 5G JAPAN, will use mutual base station assets to roll out the next-generation wireless technology across rural areas in Japan.
Previous and related coverage
- SoftBank will use telco shares as collateral to secure $4.5 billion in loans
- WeWork and Uber drag SoftBank Group into historic negative territory
- SoftBank launches $4.8 billion buyback scheme as share value plummets
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