WeWork's Adam Neumann wants the money he doesn't deserve back
SoftBank reneged on a deal to buy almost $1 billion in stock from Neumann. He says SoftBank used 'legally faulty' measures to back out.
Adam Neumann, the co-founder and ex-CEO of WeWork, has sued scorned investor SoftBank over its last-minute decision to pull out of a $3 billion stock buy-out, Bloomberg reports. The massive buy-out was planned to drastically restructure the company by buying up tons of stock from Neumann and other major shareholders.
At the time, SoftBank cited five conditions for the deal that hadn’t been satisfied by its closing date of April 1, including obtaining antitrust approvals and complete takeovers of joint ventures in Asia. The conglomerate also spoke to ongoing investigations into WeWork activities by the Justice Department, the Exchange Commission, and attorneys general in New York and California.
Now Neumann and company say the terms on which SoftBank reneged its deal were legally faulty, according to a copy of the lawsuit obtained by Bloomberg. In an emailed statement, SoftBank’s chief legal officer Rob Townsend called the claims “meritless.”
While we feel for Neumann — losing out on hundreds of millions of dollars doesn’t feel great — it's also hard to feel too bad for him, considering his ego and hubris ultimately ruined the house of cards he built.
Neumann is pissed — In the new lawsuit, which was filed in the state of Delaware, Neumann claims he only stepped down as WeWork’s CEO after being promised the stock buy-out and other financing deals for the company. He was set to receive close to $1.7 billion in that deal. So yeah, he’s angry about all that money he’s missing out on.
But this is on him — Though Neumann will lose out the most on WeWork’s reneged offer, it’s mostly his own doing. Many sources from within the company have named Neumann as the main driver for the company’s fall. Neumann risked everything by plunging his business head-first without considering the potential for failure. Now that has come back to bite him in a major way.
SoftBank is hurting too — Look, SoftBank took its exit wherever it could find it. It’s obvious now that WeWork is just a sinkhole of cash at this point. Because SoftBank provided much of the cash that’s even kept WeWork afloat into the new decade, the multinational conglomerate has also lost a lot in this deal. Neumann essentially trashed $10 billion of SoftBank’s money by running WeWork into the ground.
It’s likely this lawsuit will end in a stalemate. SoftBank has long been Neumann’s safety net — but that probably won’t last much longer, given the current tensions between them. As for WeWork, it’s still laying off its employees. The company’s future has never looked worse, which is really saying something given its storied past.