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The payout is around 20% of WeWork’s now $8 billion valuation.
Topline: With SoftBank’s takeover of WeWork nearing completion, former CEO Adam Neumann will reportedly get a $1.7 billion deal to walk away from the company and give up his voting rights.
- The WeWork board accepted SoftBank’s rescue deal on Tuesday, turning down an alternative financing proposal from JPMorgan Chase, The Wall Street Journal first reported.
- SoftBank’s takeover will see the Japanese conglomerate spend up to an additional $5 billion on WeWork shares, in a deal that values the company at just $8 billion—an 83% decline from the $47 billion valuation SoftBank first invested at in January.
- As part of the bailout package, SoftBank will pay $1 billion to buy out Neumann’s shares, a $185 million consulting fee and $500 million in credit to help him repay his loans to JPMorgan, according to TheWall Street Journal.
- SoftBank executive Marcelo Claure is expected to replace Neumann as chairman of the board and potentially find a new CEO to replace current co-chiefs Artie Minson and Sebastian Gunningham, who took the reigns after Neumman’s ouster and immediately began cutting costs to keep the company afloat.
- Neumann will remain a board observer and maintain a small stake in the company—which will fall below 10% after he sells his shares to SoftBank.
- Earlier this year, before WeWork’s problems mounted, Neumman had cashed out $700 million in shares and loans.
Key background: Once one of the country’s most valuable startups, WeWork has imploded over the last month and a half. Amid growing concerns about WeWork’s business model and corporate governance, Neumann stepped down as CEO and the company cancelled its IPO in late September. WeWork has desperately been trying to save its business and raise cash since, with SoftBank’s bailout coming none too soon.
Crucial statistic: On October 10, Forbes lowered net worth estimates for both Adam Neumann and his other co-founder, Miguel McKelvey, to below $1 billion each.