SoftBank Grabs Control of WeWork in Drastic $8 Billion Rescue Deal
SoftBank takes over the struggling co-working giant WeWork with a multi-billion dollar investment that slashes its valuation from $47 billion to just $7.5 billion.
SoftBank takes control of WeWork through a $4 billion to $5 billion investment that drops the co-working company's valuation from a peak of $47 billion to just $7.5 billion. This massive financial lifeline arrives just in time, as reports indicate WeWork is only weeks away from completely running out of cash. The Japanese conglomerate's Vision Fund parent company leads the takeover, with executive Marcelo Claure stepping in to guide the struggling management team.
This bailout follows a devastating month for the once-celebrated startup, which includes the departure of controversial co-founder Adam Neumann and the withdrawal of its highly anticipated initial public offering. WeWork currently operates under interim co-CEOs after losing several top executives, including its communications chief and chief marketing officer. The company also slashes hundreds of jobs and announces plans to close its WeGrow school next year as it desperately attempts to reduce its massive cash burn rate.
Despite previously raising over $8 billion and serving more than 527,000 members daily across 29 countries, WeWork now stands as a stark cautionary tale in the technology sector. The company shows losses of nearly $1 billion in just the first half of the year, exposing the unsustainable nature of its operations. As SoftBank assumes control, WeWork now delays its public debut until 2020 and focuses entirely on restructuring its money-losing business model to survive.