IPO failure, valuation collapse, Wework and Softbank executives are sued by shareholders

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 IPO failure, valuation collapse, Wework and Softbank executives are sued by shareholders


Netease technology news on November 9, according to foreign media reports, due to the cancellation of the initial public offering (IPO), the valuation plummeted by more than 87%, office space sharing start-up Wework executives, including co-founder and former CEO Adam Neumann, are being sued by a small number of shareholders, hoping to make up for their losses.

Natalie Sojka, a former employee of Wework, accused the companys board of directors of breaching fiduciary obligations to minority shareholders like her in a collective complaint filed this week in the San Francisco high court.

The San Francisco resident accused Weworks board of letting Japans Softbank group rescue the company, raising its stake from 29% to 80% in a cheap way and giving Neumann up to $1.7 billion in exit compensation.

Softbank and its chairman, Masayoshi son, were also among the 10 named defendants in the indictment, which also accused them of insider trading with Neumann.

Wework believes the lawsuit is worthless, a Wework spokesman said Friday Softbank, its external representatives and Mr soikas lawyers did not respond to requests for comment.

The lawsuit is a new challenge for Wework, whose New York based parent, the we company, shelved its IPO plans on September 30. Previously, investors were skeptical of its huge losses, business model and corporate governance, and Neumann resigned.

Based on Softbanks $9.5 billion rescue plan, Weworks valuation has fallen to $5.9 billion from $47 billion in August. Wework on Friday disclosed plans to spin off all non core businesses and lay off staff, with former chief of staff suing Neumann last week for pregnancy discrimination.

Michael Klausner, a professor of corporate law and governance at Stanford Law School, said that although shareholder lawsuits are often related to listed companies, Weworks private status has little impact on the merits of the case.

He added that claims for internal transactions are something that the court needs to study carefully and that it may be difficult for the defendant to dismiss..

Soika said she worked for Wework for a year and a half and was a shareholder of the company. After leaving voluntarily, she was told that Wework intended to go public soon, and that the value of her shares would rise substantially, after which she exercised her stock options. But then, the defendants behavior led to a sharp drop in the stock, and the rescue and other transactions of Softbank may also cause irreparable losses. The lawsuit is aimed at preventing further transactions between Wework and Softbank and Neumann, and limiting stock buyback by minority shareholders. In addition, the plaintiffs seek punitive damages. Softbanks rescue plan includes a $3 billion buyback of Wework shares from existing shareholders, including Neumanns $970 million stake. (small) source of this article: responsible editor of Netease technology report: Zhang Zutao, nt5054

Soika said she worked for Wework for a year and a half and was a shareholder of the company. After leaving voluntarily, she was told that Wework intended to go public soon, and that the value of her shares would rise substantially, after which she exercised her stock options. But then, the defendants behavior led to a sharp drop in the stock, and the rescue and other transactions of Softbank may also cause irreparable losses.

The lawsuit is aimed at preventing further transactions between Wework and Softbank and Neumann, and limiting stock buyback by minority shareholders. In addition, the plaintiffs seek punitive damages.

Softbanks rescue plan includes a $3 billion buyback of Wework shares from existing shareholders, including Neumanns $970 million stake. (small)