WeWork directors seek to preserve right to sue SoftBank over a $3 bn tender

This comes after lawyers for SoftBank last month wrote to WeWork's board to request that it confirm the special committee is not authorized to act on behalf of WeWork.

A special committee of WeWork board members filed a motion in Delaware on Monday to prevent it from being disbanded, as it pursues legal action against majority owner SoftBank Group Corp over an abandoned $3 billion tender offer for the office space-sharing start-up.

It is the latest salvo in a heated legal dispute between the two sides. WeWork's special committee, which represents minority shareholders in the company including its co-founder Adam Neumann, is contesting SoftBank's decision to walk away from the tender offer agreed last year.

In the motion, WeWork's special committee filed a "status quo order" which would preserve the committee's authority pending the outcome of the legal case between WeWork and SoftBank. A judge in Delaware court last month set the trial date for the case for early January.

According to the special committee's motion, the board of the We Company, WeWork's parent, held a meeting on April 29 at which the company's counsel recommended the appointment of two temporary board members who would form a new committee to adjudicate the existing special committee's authority.

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The WeWork board voted six to two to approve retaining a search firm to identify independent directors, according to the filing.

This comes after lawyers for SoftBank last month wrote to WeWork's board to request that it confirm the special committee is not authorized to act on behalf of WeWork.

Representatives for SoftBank and WeWork declined to comment on the motion.

Indian-American steps in to help WeWork sustain itself

Sandeep Mathrani replaces Artie Minson and Sebastian Gunningham, the co-chief executives.

WeWork, the troubled operator of shared office space, has named Sandeep Mathrani, a senior executive at the commercial real estate company Brookfield Properties, as its new chief.

Mathrani replaces Artie Minson and Sebastian Gunningham, the co-chief executives. Minson and Gunningham took over in September from Adam Neumann, the WeWork co-founder whose growth-at-all-costs strategy brought the company to the brink of financial collapse last year.

In a statement, Mathrani said WeWork had “redefined how people and companies approach work with an innovative platform, exceptionally talented team and significant potential if we stick to our shared values and maintain our members-first focus”.

The appointment of Mathrani, who is set to start on February 18, would be an important part of WeWork’s attempts to build a business that could sustain itself in the fast growing but highly competitive market for flexible office space.

Mathrani has been chief executive of Brookfield’s retail division since August 2018, according to his LinkedIn page.

The naming of an experienced real estate executive is a clear indication that WeWork is moving on from Neumann’s strategy of building a sprawling company with lofty aims that included transforming how people work and live together.

He had promoted WeWork as if it were a groundbreaking technology company set on upending its industry. The firm had also branched out well beyond office space, establishing sleek dormitories for working professionals and even a private school in Manhattan.

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WeWork: The last unicorn or a black sheep?

WeWork's valuation, $47 billion in a private funding round last January, could be set as low as $12 billion.

Business Standard : The WeWork’s roadshow is set to begin this week, perhaps as soon as today. Such corporate processionals through the ranks of blue-blooded Wall Street institutions are usually a triumph for buoyant, young companies. WeWork’s roadshow, on the other hand, will likely more closely resemble Cersei Lannister’s humiliating march to the Red Keep in Game of Thrones.

Shame! WeWork’s valuation, $47 billion in a private funding round last January, could be set as low as $12 billion.

Shame! Shame! Investors will no doubt be distrustful of any evidence of apparent self-dealing by the chief executive officer, Adam Neumann, such as buying properties and leasing them to the company. (WeWork took additional steps on Friday to change some of the unorthodox aspects of its governance structure and seek an independent

board member.)

As the nine-year-old office-sharing startup continues its stumble to the public markets, some prognosticators see this moment as something more significant: that a WeWork belly-flop portends the end of the unicorn era in Silicon Valley.

The argument goes like this: SoftBank, the Japanese conglomerate and its $100 billion Vision Fund, has become an engine pushing the technology market to its limit. If it’s forced to retreat on its $10 billion commitment to WeWork, SoftBank will reconsider the nearly blind sanguinity that has perverted incentives for founders and distorted valuations in the industry over the last few years.

In this seductive vision of a calamitous—and cleansing—WeWork initial public offering, modesty will once again return to Silicon Valley; humbled venture capitalists will stop bidding the valuations of unprofitable startups into the stratosphere; and the unicorns—those magical startups worth a $1 billion or more—will be put out to pasture, their legendary horns clipped like the tusks of poached African elephants.

But that’s probably wishful thinking.

The current cycle in tech started more than a decade ago, fueled by excitement over the iPhone, Facebook Inc. and the infusions of cash from a new generation of VCs like Andreessen Horowitz and Y Combinator. Business cycles tend to last seven to 10 years in Silicon Valley, and the resulting boom should have ended by now. But that was before the longest bull market in American history and a seemingly never-ending supply of venture capital from an array of new sources, including wealthy Chinese investors and Saudi Arabian oil money.

WeWork effect: How big firms look for amenity-rich environments for workers

The biggest employers on the planet see a future filled with free beer and new age motivational posters.

The biggest employers on the planet see a future filled with free beer and new age motivational posters. Their offices will need to catch up.

After WeWork Cos reinvented the office experience for freelancers and start-ups, large businesses see their use of flexible space rocketing over the next three years, according to a survey of global companies with 3.5 million employees by broker Knight Frank LLP. More than half of them expect the non-traditional space to account for at least a fifth of the total compared with about 5 percent now.

“WeWork has changed the narrative around corporate real estate,” said Lee Elliot, global head of occupier research at Knight Frank, who led the survey. As well as seeking more flexibility, big businesses will increasingly look for “amenity-rich environments that help their employees with the challenges of modern work.”

The shift presents a major challenge to the world’s biggest landlords, which have traditionally focused on securing long-term leases to maximize the value of buildings and reduce the risk of vacancies. In London, landlords including British Land Co., Great Portland Estates Plc and the Crown Estate Ltd. have begun using some of their buildings as flexible spaces in response to changing demand.

“Average central London lease lengths are now about seven and a half years,” Elliot said. “That’s at least two or three planning cycles for most business now.” He expects the share of space on flexible leases in London to rise to between 7 percent and 10 percent over the next few years from almost 5 percent now.

As big business becomes more focused on hiring and keeping talented staff, their offices become more of tool to improve recruitment and productivity. Paying higher rents for high-quality or flexible spaces offered by co-working companies may prove cheaper than constantly replacing unhappy and unproductive staff, Knight Frank researches said. Shorter leases also allow employers to be more flexible in an age when technological change is reshaping entire industries ever more rapidly.

WeWork, backed by Softbank Group Corp., has expanded at a breakneck pace since it was founded in 2010, offering clients perks like community spaces, free beer and coffee and a global network. After starting with a focus on startups and entrepreneurs, it now designs offices for larger enterprises.

Big banks including Citigroup Inc, HSBC Holdings Plc and Deutsche Bank AG have begun placing some teams, often focused on technology, in co-working or trendier office space outside their main headquarters. Morgan Stanley last month hired its first chief medical officer in a sign of how big business is becoming more focused on employee well-being and its impact on productivity.

Business Standard