WeWork sues SoftBank over canceled $3B tender offer
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WeWork sues SoftBank over canceled $3B tender offer
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Re: WeWork sues SoftBank over canceled $3B tender offer
#2Litigation is expensive, but I doubt it's going to cost SoftBank anywhere near $3B (unless they lose, which they probably won't).
Re: WeWork sues SoftBank over canceled $3B tender offer
#3Not surprising, was wondering how SoftBank seemingly walked away so easily.
If you are Softbank do you use this Covid crisis to back WeWork in to a corner even if their suit is legitimate as they might run out of cash before it reaches the courts?
From what I understood SoftBank already owns a majority of WeWork so how does the company they own, suing them work?
Re: WeWork sues SoftBank over canceled $3B tender offer
#4Well shared office space is not a good buy these days considering the corona pandemic.
Re: WeWork sues SoftBank over canceled $3B tender offer
#5Quote: WeWork’s board said that it “regrets the fact that SoftBank continues to put its own interests ahead of those of WeWork’s minority stockholders.”
Of course they’re going do to that, it’s called fiduciary duty to their own stakeholders! Such diligence is something WeWork’s board seemed to casually overlook for far too long.
At this point why would SoftBank buy WeWork shares that are in all likelihood worth little or perhaps even worthless. They’re deciding to cut their losses and move on.
If I sign a contact to buy a house it still has contingency clauses. If 2 days before closing the house burns to the ground I can walk away. Obviously I don’t want to buy a burning pile of rubble. SoftBank is walking away from buying a burning house and that makes complete sense.
Re: WeWork sues SoftBank over canceled $3B tender offer
#6Quote: WeWork’s board said that it “regrets the fact that SoftBank continues to put its own interests ahead of those of WeWork’s minority stockholders.” Of course they’re going do to that, it’s called fiduciary duty to their own stakeholders! Such diligence is something WeWork’s board seemed to casually overlook for far too long. At this point why would SoftBank buy WeWork shares that are in all likelihood worth litt…
> it’s called fiduciary duty to their own stakeholders
SoftBank has a fiduciary obligation to its shareholders. (Note: not all stakeholders. It has a duty to them. But it's not a fiduciary one.)
It also has a fiduciary obligation to WeWork shareholders, by virtue of its Board seat.
This case is, in summary, about how those duties conflict.
Re: WeWork sues SoftBank over canceled $3B tender offer
#7What a surprising surprise.
Re: WeWork sues SoftBank over canceled $3B tender offer
#8Quote: WeWork’s board said that it “regrets the fact that SoftBank continues to put its own interests ahead of those of WeWork’s minority stockholders.” Of course they’re going do to that, it’s called fiduciary duty to their own stakeholders! Such diligence is something WeWork’s board seemed to casually overlook for far too long. At this point why would SoftBank buy WeWork shares that are in all likelihood worth litt…
> it’s called fiduciary duty to their own stakeholders SoftBank has a fiduciary obligation to its shareholders. (Note: not all stakeholders. It has a duty to them. But it's not a fiduciary one.) It also has a fiduciary obligation to WeWork shareholders, by virtue of its Board seat. This case is, in summary, about how those duties conflict.
True although that scenario is hardly uncommon.
Lots of investors have board seats and there are decisions (like if to invest in the next round) where the desire of the board (get more money for a new round) may conflict with the desires of investors that have seats in the board (we think the company has run its course and don’t want to put more money in).
Like any VC SoftBank likely has lots of internal walls and controls to keep those decisions separate. Just because a VC has a board seat doesn’t tie them into perpetually funding every need of the company.
Regardless the case here seems to rely on the breach of conditions and WeWork seems to have offered little evidence that these breaches did in fact not occur. If they failed to meet the conditions SoftBank can walk away.
Re: WeWork sues SoftBank over canceled $3B tender offer
#9Litigation is expensive, but I doubt it's going to cost SoftBank anywhere near $3B (unless they lose, which they probably won't).
SoftBank just has to wait for WeWork to exhaust its cash reserves. It's clear SoftBank will take whatever steps are necessary for the deal to close and them light another $3B on fire.
From a paywall FT article [1] quoted in Matt Levin's piece ("WeWon't") on this:
> "Thousands of WeWork tenants have refused to pay rent or sought to terminate their leases over the past month, heaping pressure on the lossmaking group as its occupancy level and cash pile dwindles"
[1] https://www.ft.com/content/78dbfb03-f47d-41f3-9bf6-6696e5ef6...
Re: WeWork sues SoftBank over canceled $3B tender offer
#10Good timing, people have lots of spare attention and the supply chains for salt, butter and corn can probably be expected to bear it.