SAN FRANCISCO (BLOOMBERG) - SoftBank Group Corp has decided against taking a controlling stake in real estate company WeWork Cos and is instead planning to make a smaller US$2 billion (S$2.71 billion) investment, according to people familiar with the matter.
SoftBank, which has already invested more than US$8 billion in WeWork, had discussed taking a controlling position in the co-working startup, potentially spending US$16 billion to buy a larger position in the company, said the people, who requested anonymity because the talks are private.
WeWork's 7.875 per cent bonds, which are due in 2025, dropped 3 cents on the dollar to 86 cents on Monday afternoon in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. That's the lowest price since the debt was issued last April.
SoftBank and WeWork declined to comment on the talks. The Financial Times earlier reported SoftBank's plans to downsize its WeWork investment.
SoftBank controls two large pockets of money, the US$93 billion Vision Fund and its own corporate coffers. Originally the SoftBank Vision Fund, in part backed by the Saudi government, was considering buying the controlling stake. Now, SoftBank the company is planning to make the investment directly.