Adam Neumann, co-founder and former CEO of WeWork, has sued SoftBank for alleged abuse of power, breach of contract, and breach of fiduciary duty for withdrawing its $3 billion tender offer for WeWork shares. Neumann also filed a motion to consolidate his case with a similar lawsuit filed in April by a Special Committee of WeWork’s Board.
Both lawsuits concern SoftBank’s decision to withdraw its $3 billion tender offer for WeWork shares; SoftBank retracted its offer on April 1. SoftBank pointed to the impact of COVID-19 and that closing conditions were not met for withdrawing its offer. In particular, SoftBank noted “outstanding regulatory investigations, a growing body of litigation against the company and the failure to restructure a joint venture in China” as examples of the company’s justification to withdraw its offer. Meanwhile, Neumann claimed SoftBank was “secretly taking actions to undermine” the deal and that SoftBank “doubled down on their abuse of power.”
“SoftBank will vigorously defend itself against these meritless claims,” Rob Townsend, senior vice president and chief officer at SoftBank, said. “Under the terms of our agreement, which Adam Neumann signed, SoftBank had no obligation to complete the tender offer in which Mr. Neumann – the biggest beneficiary – sought to sell nearly $1 billion in stock.”
The complaint states, “‘SoftBank has abused its position of power to “renege on its promise to pay [Neumann, shareholders, and hundreds of employees] for the benefits it already received,’ the complaint said. The lawsuit claims that SoftBank was ‘secretly taking actions to undermine it’ by pressuring investors not to waive certain rights and preventing the China roll-up transaction from closing.”
In the complaint, Neumann claimed that “In real time, SoftBank Group and SoftBank Vision Fund are abusing their control of WeWork in an effort to stop the Special Committee’s meritorious lawsuit from being heard.”
WeWork, Neumann and SoftBank came to the original agreement in October 2019. Neumann was set to receive $1 billion for his shares of the company; he was required to give up control of the company to SoftBank.