SoftBank agreed on Tuesday to pay more than 10,000 million dollars to acquire WeWork, doubling its investment and paying close to 1.7 billion dollars to the co-founder of the company to share office space, the American Adam Neumann, to relinquish control of it .
The agreement represents a major change of direction for WeWork, as well as for its main shareholder, SoftBank Group Corp, which has committed more than $ 13 billion in capital to a company that is now valued at just $ 8 billion.
SoftBank shares fell 2.5% on Wednesday in Tokyo, while the cost of the company’s default protection has increased, with the swap of 5-year credit default rising to 17.7 points in one week, reaching the highest level since January.
Rescue funding also marks a dramatic decline in the popularity of Neumann, who just a month ago was preparing to take stock of WeWork after a valuation of $ 47 billion in January.
While WeWork employees now face the prospect of thousands of layoffs, Neumann has secured a $ 685 million side agreement with SoftBank to resign from the board of directors of WeWork’s owner, The We Company, according to people familiar with the agreement.