wework expands in southeast asia via singapore
WeWork expands in Southeast Asia via Singapore. Reuters

Japanese investing giant SoftBank has announced a massive deal to take control of co-working start-up WeWork and let founder Adam Neumann cash out his holding. The multi-billion dollar financing package announced by the Japanese conglomerate includes $5 billion in new financing and another $3 billion in a tender offer for existing shareholders. SoftBank will also speed up an existing $1.5 billion financing commitment, WeWork said in a statement.

The development comes weeks after WeWork suffered a setback in its attempt to go public, following which Neumann resigned as CEO. There have been rumours over the last several weeks that SoftBank, which already owns a third of WeWork, was interested in taking controlling stake in the co-working company. Neumann owned an estimated 18 percent in the company at the time of the proposed IPO, according to Forbes. Under the new deal, SoftBank's stake in WeWork will rise to be nearly 80 percent.

"SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work. WeWork is at the forefront of this revolution," SoftBank Chairman and CEO Masayoshi Son said in a statement after the takeover announcement.

"Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support. We remain committed to WeWork, its employees, its member customers and landlords," Son added.

Under the deal, SoftBank's chief operating officer Marcelo Claure will become the executive chairman of the board of directors of WeWork. Adam Neumann, former WeWork CEO, will become a board observer. Neumann's resignation as CEO came in September after he received flak for alleged conflict of interest and leadership style.

The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato
The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato REUTERS/Issei Kato

As SoftBank takes control of one of the biggest tech start-ups to emerge in recent years, Neumann will leave the company as a newly minted billionaire. Under the deal, SoftBank will pay Neumann $1 billion in return of his WeWork holding as well as $185 million in consulting fees. The Japanese conglomerate will also give him a $500 million credit line to settle existing loans, Forbes reported.

Following the IPO fiasco, there were reports that SoftBank Group Corp, the biggest investor in WeWork owner The We Company, was looking at replacing Neumann as chief executive.