WeWork sues SoftBank after $3B tender offer withdrawal

April 7 (UPI) -- WeWork Special Committee said that it filed a lawsuit Tuesday against SoftBank over alleged breach of fiduciary duty after the holding company withdrew its $3 billion tender offer.

The Special Committee said in a statement the holding company based in Tokyo was obligated to complete the offer to buy shares of WeWork under a Master Transaction Agreement.

"SoftBank's failure to consummate the tender offer is a clear breach of its contractual obligations under the MTA as well as a breach of SoftBank's fiduciary obligations to WeWork's minority stockholders, including hundreds of current and former employees," the Special Committee statement said.

WeWork is seeking through the lawsuit for SoftBank to complete its tender offer or pay compensatory damages for breach of contract and fiduciary duty.

SoftBank cited risk from new government investigations as a reason for withdrawing its tender offer, but the Special Committee said WeWork already knew of those investigations when it signed the agreement on Dec. 27.

The U.S. commercial real estate company, which provides shared office spaces for tech startups, was founded 10 years ago in New York City with ambitious plans to "change the world." Softbank originally made the tender offer in October after public investors soured on the company in the run-up to a planned initial public offering.

The initial public offering prospectus last year revealed that WeWork lost $900 million in the first half of the year on revenues of $1.54 billion.

The startup company was valued at nearly $50 billion at the beginning of last year, but by the time of deal in October to bailout the company it was valued at $8 billion.

The tender offer was made in exchange for SoftBank increasing its ownership stake at 80 percent. WeWork founder Adam Neumann who burned through earlier investments got a $1.7 billion "exit" package in the deal.

"SoftBank has already received most of the benefits provided to it under the MTA, including broad control of WeWork and additional economic benefits," Tuesday's statement said. "SoftBank's wrongful conduct in failing to consummate the tender offer deprives WeWork's minority stockholders of the liquidity that they were promised."