WeWork sues SoftBank after tender offer falls through

Yahoo Finance's Dan Roberts joined the Final Round to discuss WeWork's current lawsuit with SoftBank.

Video Transcript

I want to talk about a WeWork SoftBank story and bring in Dan Roberts. Dan, they said there were going to be a lot of divorces through this whole crisis. This one seems to be picking up some speed. What's going on between WeWork and SoftBank?

DAN ROBERTS: Yeah, so this was originally a tender offer from SoftBank back in November, which, you know, feels vaguely recent. And now when you think about it, actually next November soon. So it's been some time, and we know what has happened in the intervening time, Even. [INAUDIBLE] coronavirus with WeWork as a business.

Now the offer from SoftBank was going to involve SoftBank buying back shares from existing shareholders $3 billion worth. And what SoftBank is now saying is, look, WeWork didn't meet a number of the requirements of the agreement. And so it's kind of moot, and it's within our rights to back away now. And I think to the average observer who has maybe read all of the many negative stories about WeWork, that, you know, you're so inclined to say, well, that seems fair. I mean, goodbye. You know, of course, SoftBank wants out.

However, it might end up not being about kind of the success, or lack of success, of the business. It might end up being a legal issue. And what WeWork is saying is that, you know, SoftBank already received some of the benefits of this agreement, including various board controls that were given to SoftBank. So, you know, if this were to go to court or to some kind of arbiter, I don't think that people should dismiss out of hand WeWork's side of this.

Now that said, it's hard to imagine WeWork, which is so crumbled as a business and failed to meet a number of previously overhyped milestones, it's hard to imagine WeWork successfully getting all $3 billion worth of those share purchases from SoftBank in the end.

MELODY HAHM: And Dan, I think you accurately point out the macro issues for both SoftBank's vision fund, which was heralded as the next wave of innovation, as well as WeWork's larger problems at hand, where some tenants are refusing to pay rent at some of the properties. I actually spoke with several employees in different San Francisco as well as LA offices, and there has been zero communication from their own WeWork location.

So they-- I actually had a photo this morning of a woman wearing a mask, and she took all of her boxes. She runs a small startup in the LA location in Century City, and she was saying we haven't heard from WeWork. We don't know if it's safe. We don't know if people are actually cleaning. And there's this petition going around right now, actually, that WeWork should be officially closing and freezing memberships. But unfortunately, they haven't been doing that.

So the leadership is lacking sorely here as well. So this lawsuit is just kind of one iteration and one additional headache for this ongoing dialogue.

JEN ROGERS: Yeah, the ongoing saga there. That's really surprising, Melody, that-- on the cleaning front. Really interesting. I hadn't heard that. Melody Hahm and Dan Roberts on SoftBank and WeWork. We got much more coming. Stocks here holding on to some gains for the second straight day. Is the worst actually behind us, though?