WeWork, the troubled shared office space company, has agreed to be taken over by its largest outside investor, SoftBank, the Japanese technology giant, according to two people with knowledge of the matter.
The deal ends weeks of uncertainty at WeWork, a once fast-growing business that scrapped an initial public offering last month after Wall Street investors balked at its huge losses and unusual corporate governance structure.
SoftBank, which had invested about $10.5 billion in WeWork, will now have to pour billions more into the company, cut costs and stabilize the business.
The sale marks a humbling moment for WeWork. It values the company at just under $8 billion, compared to the $47 billion that SoftBank reckoned it was worth in January, people with knowledge of the bid said on Monday. Even when the company struggled to take itself public last month, it was considering doing so at a valuation at $15 billion.
Still, WeWork’s board chose SoftBank’s proposal over a $5 billion debt financing offer led by JPMorgan Chase that was also submitted on Monday.
The SoftBank deal will mean a huge payout for Adam Neumann, WeWork’s co-founder who stepped down as chief executive last month. Under Mr. Neumann, the company grew at a breakneck pace, drawing ardent backers like SoftBank’s chief executive, Masayoshi Son, and making Mr. Neumann wealthy.
But prospective investors for the company’s initial offering were skeptical of his leadership, and existing WeWork backers — including SoftBank — pushed for his ouster.
Yet Mr. Neumann will receive roughly $1.7 billion in consideration as part of the SoftBank deal, according to the people with knowledge of the offer. The technology giant will buy roughly $1 billion worth of WeWork shares from him, and will give him about $500 million worth of financing to repay a credit line he had taken out from JPMorgan. Mr. Neumann also will receive a $185 million consulting fee.
In exchange, he will back the SoftBank deal and step down from WeWork’s board.
The Wall Street Journal previously reported the terms of the deal.
This is a developing story and will be updated.