SoftBank may pull out of WeWork stock deal

TOKYO • SoftBank Group told shareholders of WeWork that it could withdraw from an agreement to buy US$3 billion (S$4.3 billion) of stock in the embattled US-based co-working company, casting doubt on a deal that had been set to close in about two weeks.

In a message to stockholders reviewed by Bloomberg, the Japanese conglomerate cited numerous inquiries by United States government agencies into WeWork.

SoftBank's shares slid as much as 6.5 per cent in early Tokyo trading yesterday, weighed down also by an outlook cut by S&P Global Ratings on Tuesday.

Spokesmen for SoftBank and WeWork parent company, The We Company, declined to comment.

The WeWork stock purchase was part of a rescue financing package by SoftBank after WeWork's failed initial public offering last year.

Mr Adam Neumann, who was ousted as WeWork chief executive during the turmoil, was slated to sell as much as US$970 million in stock as part of the deal.

Executives at SoftBank had been looking to alter the stock agreement since at least last November. They discussed possible ways to reduce the purchase amount, a move that would be designed partly to limit Mr Neumann's payout, Bloomberg reported at the time.

This week's notice from SoftBank raises questions about whether it may seek to negotiate a lower price, delay the purchase until the economy stabilises, or withdraw entirely. SoftBank's stock is down 27 per cent this month, and economists from Goldman Sachs Group and Morgan Stanley have said a global recession is under way.

The worldwide market rout could hammer the value of SoftBank's assets if it persists, S&P said in trimming the company's outlook.

SoftBank's plans to spend about US$4.8 billion on a share buyback amid plunging stock markets raise questions about its prioritisation of financial soundness, the credit rating agency added.

BLOOMBERG