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Adam Neumann back in billionaire league

  • October 21, 2021

WeWork founder and the company’s former CEO Adam Neumann has returned to the “Forbes” magazine billionaires list thanks to the flotation of the company through a merger with a SPAC today. After losing his billionaires status when the plan for IPO was shelved three years ago, “Forbes” now estimates the value of the shares he owns at $1.6 billion. WeWork merged with BowX Acquisition at a valuation of $9 billion, which is less than the valuation at which the company has raised money on the private market: $12.7 billion, without purchases of debt and secondary transactions estimated to amount to billions more. “Forbes” also estimates that Neumann holds another $200 million in financial assets that will be converted to shares in the merger.

At its height, when giant Japanese fund Softbank injected billions of dollars into WeWork and the company expanded around the world at astonishing speed, it was valued at $47 billion, with Neumann’s stake valued at $4.1 billion. Huge losses, amounting to $2 billion annually, together with inflated valuations and problematic management, led the company to abandon its planned IPO in 2019, and, after a prolonged dispute with Softbank, which took over the company, Neumann was forced to leave his post as CEO.

Even after the crisis that rocked the company three years ago, Neumann remained a substantial shareholder, with a 7% stake held through a corporation. In fact, Neumann was not left poor after being ousted as CEO. He and his partner Miguel McKelvey sold shares to the tune of $500 million in secondary deals. “Forbes” estimates that of this sum, $400 million went to Neumann.

Moreover, following a legal clash between WeWork and Neumann on the one hand and Softbank on the other, when Softbank withdrew from a large share purchase, the sides reached a settlement whereby Neumann would sell shares to Softbank worth up to $578 million and would receive in addition compensation of $106 million. This was over and above a $139 million penalty paid to Neumann for the cancellation of a non-compete agreement.

Neumann is reported to have bought real estate to the tune of $100 million, including apartments in Manhattan, an estate on Long Island, and a building called the Guitar House in North California, using loans amounting to $97.5 million in the days before the failed IPO attempt in 2019. Some of these assets have been sold since then.

The crisis between Softbank and Neumann appears to be over: the latter invited a large group of veteran employees of the company to celebrate the flotation in a Manhattan hotel. The event will apparently be at the same time as the traditional ringing of the bell at the New York Stock Exchange by WeWork’s current management.

Published by Globes, Israel business news – en.globes.co.il – on October 21, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.


Article source: https://en.globes.co.il/en/article-1001388260#utm_source=RSS

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