WeWork co-founder Adam Neumann to leave board for a year under proposed deal

WeWork is driving toward another attempt at going public, possibly by merging with a blank-checque company. PHOTO: REUTERS

TOKYO (BLOOMBERG) - Adam Neumann, the WeWork's co-founder and former CEO, would give up his role on the company's board for at least a year under terms of a legal settlement in advanced discussions, said people familiar with the matter.

The agreement, which hasn't been finalised and could still change, would remove Mr Neumann's seat as a board observer for a year, after which he could request to attend meetings again without a vote or designate someone to take his place, said the people, who asked not to be identified because the details are private.

Spokeswomen for WeWork and its biggest investor, SoftBank Group, declined to comment, and a spokesman for Neumann couldn't be immediately reached outside of regular business hours.

The board stipulation, which hasn't been previously reported, is part of a complex set of conditions that would end a high-profile legal battle between Mr Neumann and SoftBank. The settlement would also give the 41-year-old Mr Neumann US$50 million (S$65.9 million) to cover legal fees and extend by five years a US$430 million loan from SoftBank, one of the people said. Some of the details of the proposed agreement were reported earlier on Wednesday by the Wall Street Journal.

The lawsuit focuses on a stock transaction involving Mr Neumann, WeWork and SoftBank. In 2019, after WeWork's failed attempt at an initial public offering, SoftBank agreed to buy US$3 billion in stock from WeWork shareholders as part of a bailout package, nearly US$1 billion of which would be bought from Mr Neumann. Several months later, SoftBank declined to complete the purchase, and Mr Neumann and WeWork sued. The dispute was set to go to trial March 4 in Delaware Chancery Court.

A deadline in the case on Wednesday (Feb 24) passed without filings requested by the court, and people familiar with the process said the case is on track to resolve in a settlement, eliminating the need for the trial.

Under terms of the proposed settlement, SoftBank would still buy about half of what it had originally pledged to purchase, and Mr Neumann would receive about US$480 million for roughly a quarter of his ownership in the company.

WeWork and SoftBank are hoping to move on from a turbulent period in the company's life. WeWork's new CEO, Sandeep Mathrani, has said the business is on a path to profitability. The New York-based company is also driving toward another attempt at going public, possibly by merging with a blank-checque company.

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