Illustration: Aïda Amer/Axios

SoftBank yesterday threatened to pull the plug on its $3 billion tender offer for shares of WeWork, which was agreed to last fall and scheduled to close on April 1.

What’s happening: The formal message sent to investors is that SoftBank believes several deal conditions may not be satisfied, including the closing of a recapitalization of its Chinese joint venture, anti-trust approvals, and the emergence of a governmental investigation into company finances.

  • The informal message is that SoftBank wants to renegotiate, as a global recession looms and WeWork's "co-working" product appears antithetical to social distancing.

Details: WeWork closed just last month on a $1.75 billion credit facility tied to SoftBank's rescue package, and that money is not affected by the new development. Also not affected is SoftBank's nearly $200 million payment to former CEO Adam Neumann, in exchange for his board voting rights.

  • WeWork has not closed its co-working sites, even in San Francisco where a shelter-in-place order is in effect. It has, however, ramped up "deep-cleaning" efforts and asked its own corporate employees to work from home, if possible.

SoftBank's tender offer was to all WeWork shareholders, including Neumann, venture capital funds, and employees.

  • Participants could tender up to one-third of their stock at $20 per share.
  • Were Neumann to take full advantage of the offer, he'd net around $970 million.
  • While all vested employees are technically eligible, many later hires came in with strike prices above $20. In other words, it's mostly of value to earlier employees.

Between the lines: SoftBank isn't letting a crisis go to waste, and certainly has fiduciary obligations to its limited partners. And it isn't the only later-stage investor currently seeking to renegotiate existing deal terms.

  • But, but, but: This move is absolutely screwing over those early employees. These are people who may have made financial decisions over the past five months based on SoftBank's signature — and who now risk having the rug pulled out from under them.

Plus, it's also worth remembering, in terms of the government investigations:

  • We have no indication that investigators have actually found any wrongdoing, or if they're just kicking procedural tires in the wake of massive value destruction.
  • SoftBank was no passive player were there actual wrongdoing. It was a very large shareholder, had two board seats, and was very involved with the IPO process.

Neither SoftBank nor WeWork are commenting on the situation.

The bottom line: The coronavirus crisis is showing some of the best of business and humanity, with strangers trying to help one another. It's also showing some of the worst.

Go deeper

Dion Rabouin, author of Markets
35 mins ago - Economy & Business

Investors have nowhere to hide

Photo: Jeenah Moon/Getty Images

The massive losses in oil prices and U.S. and European equities were not countered by gains in traditional safe-haven assets on Wednesday.

Why it matters: The unusual movement in typical hedging tools like bonds, precious metals and currencies means they are not providing investors an asset that will appreciate in the event of a major equity selloff.

Kendall Baker, author of Sports
39 mins ago - Sports

A look inside sports owners' political donations

Data: ESPN/FiveThirtyEight; Chart: Axios Visuals

Sports team owners in the four largest North American leagues (NFL, NBA, MLB, NHL) have donated over $46 million in federal elections since 2015, according to research conducted by ESPN and FiveThirtyEight.

By the numbers: Over the past three elections, $35.7 million of that money (77.4%) has gone to Republican campaigns and super PACs, compared to $10.4 million (22.6%) to Democrats.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Large coronavirus outbreaks leading to high death rates — Coronavirus cases are at an all-time high ahead of Election Day — Fauci says U.S. may not return to normal until 2022
  2. Politics: Space Force's No. 2 general tests positive for coronavirus
  3. World: Taiwan reaches a record 200 days with no local coronavirus cases
  4. Europe faces "stronger and deadlier" wave France imposes lockdown Germany to close bars and restaurants for a month.
  5. Sports: Boston Marathon delayed MLB to investigate Dodgers player who joined celebration after positive COVID test.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Subscription failed
Thank you for subscribing!