The news is by your side.

WeWork's co-founder is trying to take over the company

0

Adam Neumann rose to fame by turning WeWork into a cultural and business phenomenon before being dramatically ousted from the workplace operator business.

But in recent months he has tried to take over the now bankrupt company – with the help of hedge fund magnate Dan Loeb, DealBook first reported.

Neumann's new real estate company Flow Global Urges WeWork to Reconsider its Acquisition Approach, This is evident from a letter that his lawyers sent to WeWork's advisors on Monday. Flow, which has already raised $350 million from venture capital firm Andreessen Horowitz, announced in the letter that Loeb's Third Point would help finance a transaction. (Read the letter.)

Flow has tried to buy WeWork or its assets and provide bankruptcy financing to keep the company afloat.

But Flow's lawyers accused WeWork of obstruction for months. “We are writing to express our dismay at WeWork's lack of involvement, even to provide information to my clients in what is intended to be a value-maximizing transaction for all stakeholders,” the lawyers, led by Alex Spiro of Quinn Emanuel, wrote, who also represents Elon. Musk and Jay Z.

It's the latest twist for WeWork, which became a symbol of the risk capital surplus in its fourteen-year history. The company grew rapidly, becoming the largest tenant in many major cities and reaching a paper valuation of $47 billion. And Neumann – backed by billions from Japanese tech giant SoftBank – increasingly presented it as a way to “raise the world's consciousness.”

But Neumann stepped down as CEO in 2019 after WeWork failed to go public, largely due to investor concerns about its business model and corporate governance. The company began to struggle and repeatedly tried to renegotiate its leases and cut costs. (It's unclear whether WeWork stakeholders would want to sell the company back to the man some say caused the problems.)

WeWork filed for bankruptcy last November. In a restructuring plan filed in bankruptcy court on Sunday, the company said it had more than $4 billion in secured debt alone and that SoftBank was among its top creditors. During a court hearing on Monday, lawyers for landlords and others complained about WeWork may not have enough money to pay rent.

Some experts have suggested that WeWork could be sold for a fraction of its outstanding debt, perhaps as little as $500 million.

Neumann has been trying to invest in WeWork for years. According to the letter, in October 2022 he attempted to “arrange up to $1 billion in financing to stabilize WeWork.” But the company's then-CEO “terminated that process without explanation,” the lawyers wrote.

When WeWork filed for Chapter 11, Neumann said at the time that “with the right strategy and team, a reorganization will enable WeWork to emerge successfully.” But he also said that Flow – which focuses on the housing market – “wouldcompete or collaborate” with his former company.

Flow's lawyers wrote in the letter sent Monday that “in a hybrid work world where demand for WeWork's product should be greater than ever,” the math of combining the two companies “will exceed the standalone value of WeWork could significantly exceed.”

A delegation from the Ministry of Finance goes to Beijing for economic talks. Senior US officials will hold two days of meetings with their Chinese counterparts to discuss issues such as government subsidies, China's role as a creditor to developing countries and the countries' macroeconomic prospects. The talks could pave the way for a second trip to Beijing by Treasury Secretary Janet Yellen in as many years.

Mortgage interest rates exceed 7 percent. The average rate for a 30-year fixed mortgage reached 7.04 percent on Monday, the first time since December, following stronger-than-expected jobs and manufacturing reports. The average remains below October's 8 percent, a 20-year high; Mark Zandi, Moody's chief US economist, recently predicted that if rates were to return to that level, it would hurt President Biden's re-election chances even as the economy recovers.

Novo Nordisk's parent company signs a deal to boost production of its weight-loss drugs. Novo Holdings agreed Buy Catalenta major pharmaceutical subcontractor that fills injection pens for $16.5 billion to help meet demand for the Wegovy and Ozempic treatments.

Meta's Oversight Board is pushing for changes to the social media giant's rules on manipulated media. While the administration allowed an edited video of President Biden behaving inappropriately to remain online, it urged the tech giant to to change its “incoherent” policies about the issue. The Oversight Board cited the potential impact of such doctored videos on the election as a reason to take action.

Some of the most powerful bankers and advisers with ties to Saudi Arabia, including top executives from McKinsey and Teneo, will appear in Congress on Tuesday as part of a Senate investigation into the kingdom's growing influence in corporate America.

The advisors and dealmakers are caught between Washington and Riyadh. Senator Richard Blumenthal, Democrat of Connecticut, launched the investigation last year after the PGA Tour struck a tentative deal with LIV Golf, the leading group backed by the Saudi Public Investment Fund known as PIF. (Questions hang over the potential alliance after the PGA Tour announced a new set of U.S. investors last week.)

Those that will appear include:

  • Michael Klein of Klein & Co., the veteran Wall Street dealmaker known to have close ties to the Middle East and the United States PIFincluded advising on the IPO of Saudi Aramco,

  • Bob Sternfels, the global managing partner at McKinsey, who has advised Saudi Arabia on initiatives including the eventual creation of LIV Golf,

  • Paul Keary, the CEO of Teneo, who advised on the PIF's deal with the PGA Tour,

  • And Rich Lesser, the global chairman of Boston Consulting Group, whose top executives have had a close relationship with the crown prince.

Blumenthal has summoned the advisers to speak about their work in advising the kingdom on deals. The Saudi wealth fund sued the consultants in a Saudi court arguing that they cannot release confidential information.

Representatives for Klein and Teneo declined to comment. BCG and McKinsey did not respond to requests for comment.

A PIF spokesperson said it was making “significant efforts” in response to the Senate request for documents, but stressed that ultimately Saudi law “has the right to be respected.” (PIF is work with Raphael Prober, partner at law firm Akin Gump.)

The tug-of-war highlights the complexity of U.S. relations with Saudi Arabia. The appearance on Capitol Hill comes just a day after Secretary of State Antony Blinken meeting with the Saudi crown princeMohammed bin Salman, to try to resume talks over the kingdom and normalize relations with Israel.

Blumenthal is expected to argue that the consultants are hiding behind foreign contracts. “Refusal to cooperate with this subcommittee would set a dangerous and unsustainable precedent,” he wrote a memo. (Blumenthal is very suspicious of any LIV-PGA deal.)

The executives may respond that they are bound by the lawsuits and that cooperating with the Senate investigation would put their employees in Saudi Arabia at risk.

The dealmakers may have few options. Congress could seek criminal or civil enforcement of the subpoenas in a U.S. court.

“No matter what they do, they're going to break someone's law,” Julian Ku, a professor at Hofstra University Law School, told DealBook. “The answer is: follow the country you fear most.”

— Meghan Biro, an HR consultant, on the waves of layoffs at Google that employees say have undermined morale. Technology companies have moved on cutting jobs save costs; was the last Snapwhich laid off more than 500 employees on Monday.

Just as Bitcoin enters the mainstream of Wall Street investing with a market value of nearly $840 billion, a London court is investigating a mystery that has hung over the sector for years: who is “Satoshi Nakamoto,” the pseudonymous creator of the cryptocurrency?

The legal battle pits a group backed by Jack Dorsey against Craig Wright, an Australian computer scientist who is expected to testify Tuesday. Wright insists that he is Satoshi, as its creator came to be known, and that he owns the intellectual property rights behind Bitcoin's blockchain. Skeptics say Wright is lying, and he is challenged him to produce the private keys, or code, to an original stash of Bitcoins that would be worth about $47 billion today.

Lawyers for the Crypto Open Patent Alliance (a nonprofit backed by Coinbase and Dorsey's digital payments company Block) said in court Monday that Wright's claims are a “bold lie.” They ask the court to rule that he is not Satoshi.

The story started in 2008 when a programmer going by the name Satoshi Nakamoto published an article about Bitcoin, a digital currency that allows people to transact through a shared electronic ledger without traditional intermediaries like governments or banks. The idea caught on, but the identity of its creator remained unknown.

Many, including Wright, have claimed to be the elusive Satoshi. Wright amplified the narrative by threatening Bitcoin developers with lawsuits and filing lawsuits for alleged infringement of intellectual property rights.

In an opening statement on Monday, Wright's attorney said the evidence would show Wright was the author of the white paper.

A COPA representative told DealBook that it would present evidence showing that Wright's alleged proofs are fake and that they were produced in fonts or on paper that did not exist in 2008.

Crypto companies want this case to serve as a warning to so-called Satoshis. They also want to send a clear message to Wright: stop suing crypto developers, a move they fear will deter some programmers from working on the Bitcoin blockchain.

Offers

  • Blackstone is said to be considering a takeover bid on the American market skin care company L'Occitane, with a market value of $5.4 billion. (Bloomberg)

  • Presentation materials for potential investors reportedly tout Elon Musk's xAI access to the 'Muskonomy', the billionaire's constellation of companies. (Bloomberg)

Policy

The best of the rest

We want your feedback! Send your ideas and suggestions by email to dealbook@nytimes.com.

You might also like More from author

Leave A Reply

Your email address will not be published.