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The Japanese investment giant dropped the purchase last week, citing ongoing criminal and civil investigations into the co-working company. A two-member committee of The We Company’s board said the move breached contractual obligations. (Reuters)

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Talking point: The tender offer was part of a rescue plan SoftBank put together in October 2019, after WeWork’s initial public offering collapsed over its financial-reporting issues and large losses. WeWork’s occupancy rates have dropped amid the COVID-19 outbreak, but its core rental business was in trouble even before the outbreak, signing just four new leases in the U.S. in the fourth quarter of last year. The loss of SoftBank’s billions may not significantly affect the company’s prospects—ex-CEO Adam Neumann and other minority shareholders were poised to benefit from the share sale. The company said it still has enough cash on the balance sheet and financial commitments to fund its five-year plan.

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SoftBank said five closing conditions were not met since it signed the deal in October, and raised concerns about the “existence of multiple, new and significant pending criminal and civil investigations.” (Bloomberg, The Information)

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Talking point: In the short term, the person who loses out the most here is WeWork co-founder and ex-CEO Adam Neumann, who was set to make up to US$970 million selling shares to SoftBank and is now threatening to sue. He’s also no longer a billionaire, with his net worth dropping from US$13.5 billion to US$450 million in less than a year. Long-term, though, SoftBank’s reluctance is a major issue for WeWork, which spent US$1.4 billion in the last three months of 2019, nearly all the cash SoftBank gave it in October 2019. WeWork has been keeping most of its co-working spaces open despite COVID-19, but almost no one is in them.

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The co-working-space firm spent US$1.4 billion in the last three months of 2019, nearly all the money SoftBank injected into WeWork in October 2019 as part of an emergency bailout. (Financial Times)

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Talking point: These numbers show WeWork was burning through cash even before it had to close locations due to COVID-19, and prior to last week’s warning from SoftBank that it might not buy US$3 billion of its shares. There is some good news in the year-end numbers. WeWork generated US$3.5 billion in revenue for the year, a 90 per cent year-over-year increase. SoftBank is trying to get its own house in order at the moment. Last weekend, the firm held talks about going private, before pivoting to an up to US$41-billion asset sale. That new money is earmarked for paying off SoftBank’s significant debts, but could in theory also be used to bolster WeWork. Despite that, WeWork is facing a number of other challenges. The U.S. Securities and Exchange Commission, the Justice Department and New York state officials are all looking into its activities.

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The Japanese firm notified WeWork shareholders it does not believe it needs to purchase the shares from existing investors, due to a number of ongoing investigations into the office-sharing firm. The move does not affect the US$5 billion SoftBank has already offered WeWork after it pulled back from its IPO. (The Wall Street Journal)

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Talking point: The notice does not guarantee SoftBank will pull its money, but it comes as the short-term-rental market is being hit hard by COVID-19 as a growing number of people work from home. If SoftBank pulls the US$3 billion, it’ll affect ousted WeWork CEO Adam Neumann, who secured the right to sell up to US$970 million in stock as part of the deal. SoftBank has received information from the U.S. Securities and Exchange Commission, the Justice Department and New York state officials regarding WeWork. The Japanese firm is facing a host of its own troubles outside WeWork, though. Its shares fell 10 per cent Wednesday to their lowest point since 2016. S&P Global cut SoftBank’s credit rating to negative earlier this week, following SoftBank’s announcement that it would buy back shares.

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The former chief executive of Brookfield Properties’ retail group previously led General Growth Properties, America’s second-largest mall owner, out of the country’s biggest real estate bankruptcy at the time. (Bloomberg)

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Talking point: Mathrani has his work cut out for him in his new role. Over the past five months, The We Company, WeWork’s parent, pushed out founder and CEO Adam Neumann, pulled its IPO, struck a bailout deal with lead investor SoftBank, shed some 80 per cent of its valuation and said it was laying off some 2,400 employees. Its competitors are trying to convince investors that while they could be their next WeWork, they are definitely not the “Next WeWork.” Bringing in a relatively unknown but respected CEO with profitable success and investor confidence helped Uber in 2017, when the company brought in former Expedia executive Dara Khosrowshahi—a success WeWork will be looking to mimic with Mathrani’s appointment.

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The beleaguered workshare startup has sold its 23 per cent stake of The Wing to a consortium that includes Alphabet’s venture capital arm and actress Mindy Kaling. The company also recently sold off Teem, its meeting-space technology company. (The Logic, Crunchbase)

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Talking point: The divestment of its non-core assets is indicative of WeWork’s recent humbling. Founded in 2010 in a burst of utopian bonhomie, WeWork sought to reflect the “We decade,” in which “collaboration [was] the future of innovation”—and snapped up like-minded assets in the years since. Yet investors balked at the company’s losses and oddly constructed corporate ladder, resulting in the company’s cancelled IPO attempt last September and subsequent turfing of CEO Adam Neumann. Management now appears to have a less hubristic view: WeWork is nothing more and nothing less than a giant commercial real estate company.

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The office-space provider signed just four new leases in the U.S. in the last quarter, after cancelling plans to go public in September 2019. WeWork lost its lead as the country’s biggest leasing company for flexible office space to Spaces, which increased its footprint by 11 per cent. (CNBC)

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Talking point: The quarter saw WeWork lay off 2,400 employees and oust former CEO Adam Neumann as part of a plan by SoftBank—which now owns a majority stake in the firm—to reel in the company’s spending spree after investors soured on its plans to go public. WeWork has been planning to open five new spaces across Toronto, Vancouver and Montreal. So far, the company has not cancelled those openings, but it hasn’t announced any new expansions, either. While office space is increasingly being occupied by flexible leases in Canadian cities, it’s nowhere near as saturated as it is in markets like Manhattan and San Francisco. That could make Canada a safer bet for the company as it takes a more measured approach to expansion.

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The ex-CEO could glean up to US$111 million from WeWork if the company goes public at a US$10-billion valuation, based on a share-restructuring scheme put in place after the cancelled IPO this year. Neumann left the company in October with US$1.7 billion in severance. SoftBank, the company’s top shareholder, most recently valued WeWork at US$8 billion, down from US$47 billion in January. (Financial Times)

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Talking point: The profits are contingent on WeWork going public and Neumann selling a particular class of shares called profits interests. The company maintains that it will eventually list on the public markets, but it will first have to redeem its reputation among investors. Masayoshi Son, CEO of SoftBank, which took over 80 per cent of WeWork in October, admitted to being misled by Neumann in the wake of the failed IPO. The Japanese tech conglomerate has since led a restructuring at the company and slashed expenses, including ousting Neumann and laying off thousands of employees. The changes try to address the investor concerns that toppled the IPO, but the question of whether its core business model—signing long-term office leases to rent to its own tenants—can be profitable remains an obstacle for a future listing.

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Production companies Chernin Entertainment and Endeavor Content have acquired the TV rights to a forthcoming book about WeWork by Wall Street Journal reporters Eliot Brown and Maureen Farrell. Nicholas Braun, who plays Cousin Greg in the HBO series “Succession,” will executive produce and star as WeWork ex-CEO Neumann. (The Hollywood Reporter)

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Talking point: The series will chronicle WeWork’s ascent to a US$47-billion office-sharing startup before its spectacular crash in September that saw it lose roughly US$35 billion in value after canceling its IPO and ousting Neumann. While employees and investors—namely SoftBank—have collectively lost out on billions from their involvement in the company, the entertainment business is one industry for which WeWork could still create wealth. On top of the TV series, a feature film on WeWork is in the works, based on another forthcoming book from reporter Katrina Brooker of Fast Company. Blumhouse Productions, the company behind Get Out, Paranormal Activity and Whiplash, is producing the film.

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The firm will eliminate 2,000 to 2,500 jobs in its primary office-space rental business, along with another 1,000 through closing or divesting from other divisions. WeWork executive chairman Marcelo Claure confirmed that staff “will be separated this week” in an email to employees on Monday. (The New York Times, CNN)

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Talking point: The layoffs come as Claure lays out a financial restructuring plan to WeWork’s board and employees this week. It’s getting out of non-core businesses like the private New York school it opened in September 2018. The company is also reportedly trying to save money by shifting some employees off its books; the WeWorkers Coalition, a group claiming to represent workers, tweeted on Saturday that almost 1,000 maintenance and cleaning staff in the U.S. and Canada are being “involuntarily terminated” next month and offered jobs at real estate services company JLL, which would contract them back to WeWork “for the time being.”