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SoftBank reviews USD 3 billion tender offer for WeWork shares

Tech conglomerate moves to cut exposure as stock slides to more than 3-year low.

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SoftBank Group is reviewing its plan to buy USD 3 billion worth of shares from existing shareholders of US office sharing company WeWork, signaling the Japanese conglomerate’s intention to cut back on its exposure amid a global stock market sell-off.

SoftBank told shareholders on Tuesday it was possible that the tender offer may not go ahead if the conditions for the offer were not met, according to a person familiar with the matter.

The notice says regulators, including the US Securities and Exchange Commission and Department of Justice, are probing WeWork’s business. The tender includes a USD 970 million purchase from WeWork founder Adam Newman.

The person familiar with the matter said SoftBank is still fully supportive of WeWork and that it has secured the necessary funding. After WeWork pulled the plug on its initial public offering last year, SoftBank announced USD 5 billion in financial support measures through syndicated loans and bonds, as well as moving forward on a USD 1.5 billion payment obligation.

News of the review comes as the global turmoil in stock markets is putting pressure on SoftBank’s investments, including some of the 88 companies backed by its near USD 100 billion Vision Fund. WeWork has temporarily closed some of its offices around the world and is refraining from holding events for tenants amid the coronavirus pandemic.

SoftBank’s stock price fell more than 10% in early morning trading on Wednesday, temporarily hitting its lowest level since November 2016.

S&P Global Ratings on Tuesday cut SoftBank’s credit rating outlook from “stable” to “negative,” citing its recently announced share buyback and falling stock prices as a risk to the Japanese technology conglomerate’s financial health.

Canceling the tender offer for WeWork shares may be “one factor that eases pressure for a downgrade,” SMBC Nikko Securities said in a note on Wednesday.

This article first appeared on Nikkei Asian Review. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei. 36Kr is KrASIA’s parent company