NEW YORK (BLOOMBERG) - SoftBank Group plans to let the deadline for a US$3 billion (S$4.3 billion) deal with WeWork shareholders expire without completing the agreement to buy more equity, despite threats of legal action from some members of the company's board.

SoftBank had previously agreed to buy shares from former chief executive officer Adam Neumann, venture capital firms and employees, but notified stockholders in mid-March that conditions for the deal hadn't been met. The deadline for investors to tender their shares is 11.59pm New York time.

"The Special Committee of the Board of Directors of WeWork has been advised by SoftBank, the controlling shareholder of WeWork, that it will not consummate the tender offer which it agreed to in October of 2019," the committee, made up of Benchmark Capital's Bruce Dunlevie and another director, Lew Frankfort, said in an emailed statement. "The Special Committee is surprised and disappointed at this development, and remains committed to reaching a resolution that is in the best interest of WeWork and its minority shareholders, including WeWork's employees and former employees. The Special Committee will evaluate all of its legal options, including litigation."

SoftBank didn't respond to requests for comment.

The share purchase was hammered out in October as part of SoftBank's bailout of WeWork after the co-working company's failed initial public offering left it weeks away from running out of money. In the deal, the Japanese conglomerate would have taken an ownership stake of almost 80 per cent in the company and buy US$3 billion in shares from investors as well as current and former employees. Neumann, ousted in the deal, was set to sell up to US$970 million in shares. The generous exit package angered many of his employees, thousands of whom had their jobs eliminated in the following months as WeWork parent We tried to cut its expenses.

In the past few weeks, the deal has become increasingly contentious. SoftBank sent a letter to WeWork shareholders saying it could withdraw from the agreement if certain conditions weren't met by the deadline. SoftBank cited regulatory concerns and a handful of government investigations into WeWork, including from the US Securities and Exchange Commission and the Justice Department.

"Neither SoftBank nor the company can offer any assurances regarding the scope of these investigations, the nature of any actions that these or other regulatory parties will take, or the timing within which they will be resolved," the Japanese company said in its letter, arguing it has no obligation to complete the tender offer.

The two WeWork independent board directors responded, saying they would consider legal action if SoftBank pulled out. "Its excuses for not trying to close are inappropriate and dishonest," a spokesman for the directors had said in a statement.

The latest deal is separate from SoftBank's bailout of WeWork itself, a package that included US$5 billion in new financing and the acceleration of an earlier US$1.5 billion commitment. Most of the money would have gone to five shareholders, including Neumann and the venture capital firm Benchmark, which was looking to sell US$600 million in shares, Bloomberg has reported. Less than 10 per cent of the proceeds would have gone to current WeWork employees, SoftBank has said.

Still, if the transaction falls apart, it will have repercussions for WeWork. As part of the deal, the company would get US$1.1 billion in debt financing from SoftBank only if the share purchase is completed.