TOKYO — SoftBank Group Corp. has reached a settlement in a US legal dispute with directors of office space-sharing venture WeWork Inc. and its founder Adam Neumann, the Japanese technology company said Saturday.
The terms of the settlement in the Delaware Court of Chancery were not disclosed publicly. Citing people familiar with the matter, the Wall Street Journal reported on Thursday that Neumann was set to receive an extra $50 million windfall and other benefits as part of the agreement.
SoftBank Group did not release further details of the deal that puts to rest a bitter dispute emerging from the Japan-based firm’s 2019 decision to bail out WeWork, once regarded as a soaring unicorn but which quickly spiraled into deep troubles as it lost cash and canceled its eagerly awaited share offering.
Neumann was forced out as WeWork chief executive in September 2019 as the company’s value plummeted and amid heavy criticism of his behavior and management. In October 2019 WeWork was taken over by SoftBank, which spent over $5 billion on the move. Neumann walked away with nearly $2 billion.
But some investors, and Neumann, were not satisfied with the monetary deals offered and they then sued SoftBank claiming the investment firm breached its obligations by backing out of a $3 billion rescue plan.
Under the settlement of the dispute, the Wall Street Journal reported, SoftBank Group would buy about $1.5 billion of stock from other investors, including nearly $500 million from Neumann, roughly a half of what it originally planned to buy.
The deal would give the controversial founder a $50 million windfall, another $50 million to cover his legal fees and extend by five years a $430 million SoftBank Group loan, according to reports.
“With this litigation behind us, we are fully focused on our mission to reimagine the workplace and continue to meet the growing demand for flexible space around the world,” said Marcelo Claure, executive chairman of WeWork and SoftBank Group International chief executive.
Neumann, who was born in Israel and partially raised on a kibbutz, had taken the tech startup world by storm with his company in the 2010s. At the height of its popularity, WeWork was a dazzling unicorn valued at $47 billion, and SoftBank’s founder Masayoshi Son had openly hailed Neumann’s vision.
When it agreed to the SoftBank bailout, its valuation stood at around $8 billion.
SoftBank has remained a majority shareholder in WeWork, whose bumpy results, especially amid the coronavirus pandemic, has dented SoftBank’s financial results.
SoftBank says WeWork holds potential, especially in markets like Japan, where office space is costly and workers’ commutes tend to be long. SoftBank also invests in artificial intelligence, internet services, sustainable energy and IoT.
Luke Tress contributed to this report.