WeWork co-founder Adam Neumann accuses SoftBank of abusing its power in new lawsuit
WeWork co-founder Adam Neumann accused SoftBank Group of abusing its power in a new lawsuit filed Monday that alleges breach of contract and breach of fiduciary duty for pulling a $3 billion tender offer for WeWork shares.
The lawsuit, filed in Delaware Court of Chancery, included a motion to consolidate his case with a lawsuit filed last month by a Special Committee of WeWork’s board. Both lawsuits focus on Softbank Group and its Vision Fund’s decision to back out of a deal to buy shares of the co-working company.
Softbank Group pulled its $3 billion tender offer for WeWork shares April 1, citing COVID-19’s impact on the business but also closing conditions not being met. Specifically, it pointed to outstanding regulatory investigations, a growing body of litigation against the company, and the failure to restructure a joint venture in China as reasons to torpedo the agreement.
“SoftBank will vigorously defend itself against these meritless claims,” Rob Townsend, senior vice president and chief officer at SoftBank, said in a statement. “Under the terms of our agreement, which Adam Neumann signed, SoftBank had no obligation to complete the tender offer in which Mr. Neumann – the biggest beneficiary – sought to sell nearly $1 billion in stock.”
A deal was struck in October 2019 to buy out some of the equity held by Neumann, as well as the venture capital Benchmark Capital and many individual company employees. Neumann was set to receive almost $1 billion for his shares.
WeWork and Neumann gave control of the company to SoftBank, which increased its ownership at a significantly reduced price, according to the complaint.
“SoftBank has abused its position of power to “renege on its promise to pay [Neumann, shareholders, and hundreds of employees] for the benefits it already received,” the complaint said. The lawsuit claims that SoftBank was “secretly taking actions to undermine it” by pressuring investors not to waive certain rights and preventing the China roll-up transaction from closing.
The lawsuit further alleges that SoftBank’s financial condition influenced the company’s decision to terminate the tender offer.
The lawsuit alleges that SoftBank “abused its power” after WeWork’s special committee filed a lawsuit by insisting that only the board, which is controlled by Softbank, could take legal action.
“In real time, Softbank Group and Softbank Vision Fund are abusing their control of WeWork in an effort to stop the Special Committee’s meritorious lawsuit from being heard,” the complaint reads.
WeWork co-founder Adam Neumann accused SoftBank Group of abusing its power in a new lawsuit filed Monday that alleges breach of contract and breach of fiduciary duty for pulling a $3 billion tender offer for WeWork shares. The lawsuit, filed in Delaware Court of Chancery, included a motion to consolidate…
