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MarketScreener Homepage  >  Equities  >  Tokyo  >  SoftBank Group Corp    9984   JP3436100006

SOFTBANK GROUP CORP

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SoftBank : WeWork gets $2 billion after SoftBank cuts planned investment

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01/08/2019 | 03:42pm EDT
FILE PHOTO - A guest attends the opening ceremony of WeWork Hong Kong flagship location in Hong Kong, China

(Reuters) - WeWork said on Tuesday that Japan's SoftBank boosted its stake in the company by $2 billion in a deal that is billions of dollars below what the shared workspace provider had hoped to raise to fund growth and buy out existing shareholders.

The transaction brings Softbank Group Corp recent investment to $6 billion, WeWork said in a statement. That is below the $20 billion in funding the two companies had recently discussed, WeWork Chief Executive Adam Neumann said in an interview with Fast Company published on Tuesday.

SoftBank Chief Executive Masayoshi Son cut the size of the investment after his company's stock tumbled in last month's global stock market turmoil, Neumann told Fast Company.

WeWork on Tuesday also announced plans to operate under a new name, The We Company, which will operate separate business units that lease commercial office space, rent out residences and run schools.

The initial plan was to invest $10 billion in SoftBank money to fund WeWork's growth plans and use another $10 billion to buy out employees and other existing investors, according to a person familiar with the matter. That proposal would have given SoftBank majority control of WeWork.

Reducing the investment leaves WeWork with $1 billion to buy shares from existing investors and means Softbank will not gain majority control, said the person, who was not authorized to discuss the negotiations between the two firms.

The newly promised funds will not include any money from SoftBank’s Vision Fund, whose biggest investor is Saudi Arabia, WeWork said.

SoftBank used some Vision Fund money to make its early investments in WeWork. But recent investments have come solely from SoftBank Group due to political tensions following the death of journalist Jamal Khashoggi and some Fund investors raising concerns about investing too heavily in WeWork, the person said.

SoftBank has invested a total of around $10.4 billion in WeWork so far - $4.4 billion in 2017 and $6 billion in 2018 and 2019.

In the first three quarters of 2018, WeWork posted a net loss of about $1.22 billion on revenue of $1.25 billion.

Demand for flexible office space has steadily grown over the past decade, rising to about 11 percent of all leasing in Manhattan last year from about 3 percent several years ago, according to brokerage Colliers International.

(Reporting by Angela Moon in New York; Additional reporting by Herb Lash; Editing by Jim Finkle, Jeffrey Benkoe and Dan Grebler)

By Angela Moon

Stocks mentioned in the article
ChangeLast1st jan.
COLLIERS INTERNATIONAL GROUP INC 0.92% 92.8 Delayed Quote.23.26%
SOFTBANK GROUP CORP 1.85% 10190 End-of-day quote.45.47%
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Financials (JPY)
Sales 2020 9 741 B
EBIT 2020 1 033 B
Net income 2020 1 250 B
Debt 2020 11 623 B
Yield 2020 0,62%
P/E ratio 2020 8,19
P/E ratio 2021 15,04
EV / Sales 2020 2,31x
EV / Sales 2021 2,40x
Capitalization 10 857 B
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 14 234  JPY
Spread / Average Target 44%
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Managers
NameTitle
Masayoshi Son Chairman, President & Chief Executive Officer
Raul Marcelo Claure Chief Operating Officer & Director
Norikazu Oba Manager-Finance & Planning
Tadashi Yanai Independent Outside Director
Ken Miyauchi Representative Director & Vice President
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