Japanese conglomerate SoftBank Group is preparing a takeover bid for WeWork, says The Wall Street Journal. The office management company, now the "poster child for start-up excess", is "bleeding cash and [being] shunned by mainstream investors". In exchange for injecting enough money into WeWork to relieve its "looming cash crunch", SoftBank would take control of it. The proposed deal would further sideline WeWork's controversial founder, Adam Neumann, who recently resigned as CEO but retains "substantial" voting power. SoftBank, which has already invested over $10bn in WeWork, reckons it "needs at least $3bn to get through the next year".
SoftBank may want to take over WeWork, but WeWork may have other ideas, says Bloomberg. In order to "avoid having their stakes severely diluted", Neumann and other major stakeholders are hoping that "emergency borrowing" can enable them to "turn around the office-sharing venture". WeWork's banker, JP Morgan, is "discreetly sounding out investors and floating" possible terms for a $5bn financing package that could prevent the loss-making group from "running out of money as soon as next month". The plans are "risky", but could reward investors "handsomely" if the firm does indeed recover.
Is it too late?
Even if WeWork manages to cling on, its business may be permanently damaged, says Dominic Rushe in The Guardian. After years of "breakneck growth", new openings have "all but stopped in WeWork's two largest markets, New York and London, as landlords worry about the company's future". Meanwhile, staff claim that the collapse of the planned initial public offering, and the 2,000 redundancies widely expected to be announced, has created a "toxic" atmosphere.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It's not just WeWork's core business that is suffering, says The New York Times. For example, while it promised that its subsidiary WeLive, which runs managed apartments, "would become integral to the company's future", it only operates in two locations and is being investigated for illegally offering short-term hotel rooms. The education subsidiary WeGrow has also said that it will close its only for-profit school next year. Both offshoots have "become something of a metaphor for the entire company... big promises, but lacklustre results".
-
Rachel Reeves confirms ‘workaround’ for pensioners facing tax bill on state pensionAs the full new state pension looks set to breach the tax-free personal allowance within years, the government has said anyone on just a state pension won’t have to pay income tax on the payment until the end of this parliament
-
Zoopla: House prices in southern England drop for first time in 18 monthsHouse buyers could benefit from a fall in prices, triggered by a rumoured ‘property tax’ prior to the Budget, as Zoopla revealed lower prices for the first time in 18 months
