Adam Neumann, the co-founder of WeWork, is making a bold attempt to buy the company out of bankruptcy with the backing of Wall Street. Neumann, who was ousted from WeWork after incurring billions of dollars in losses, claims to have the support of Daniel Loeb’s hedge fund Third Point. However, Third Point clarified that they have only had preliminary conversations with Neumann and his property company, Flow, and have not committed to any transaction.
Neumann’s bid to regain control of WeWork faces significant challenges. He must win the support of the company’s senior creditors, who were set to take control if WeWork emerged from bankruptcy. This includes SoftBank, which has invested over $16 billion in WeWork and its affiliated businesses. Neumann’s strained relationship with WeWork and its creditors adds another layer of complexity to his takeover attempt.
The valuation of WeWork peaked at $47 billion in private markets under Neumann’s leadership but plummeted after the cancellation of its initial public offering. Potential investors raised concerns about the company’s business model and Neumann’s management style. Despite these setbacks, Neumann believes that in a hybrid work world, the demand for WeWork’s product will be greater than ever. He argues that his acquisition, with the synergies and management expertise offered by his team, could significantly exceed the standalone value of the company.
Neumann’s lawyer, Alex Spiro, expressed his client’s disappointment with WeWork’s lack of engagement during the restructuring process. He emphasized that WeWork’s refusal to provide proper information has jeopardized the company’s ability to maximize value for all stakeholders. Neumann has been well-compensated by SoftBank in the past, receiving a $185 million non-compete agreement in 2019 and a $106 million settlement in 2021.
While Neumann has held discussions with some of WeWork’s creditors, including King Street Capital, Brigade Capital, and BlackRock, it remains uncertain if any of them are willing to support his plans. Additionally, time is of the essence as WeWork’s financial situation deteriorates. The company’s lawyers informed a bankruptcy judge that WeWork is running out of money and urgently needs new financing. The progress in restructuring leases has been slow, further complicating the situation.
WeWork responded to Neumann’s bid by stating that they have reviewed all expressions of interest but believe that their current efforts to address unsustainable rent expenses and restructure the business will position them for success.
As the battle for control of WeWork unfolds, it remains to be seen if Adam Neumann can overcome the challenges and convince WeWork’s creditors to support his bid. The future of the company hangs in the balance, and stakeholders eagerly await the outcome of this high-stakes battle.