IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
)
)
)
)
)
Plaintiffs,
)
) C.A. No. 2020v.
)
)
SOFTBANK GROUP CORP. and
SOFTBANKVISION FUND (AIV M1), )
)
L.P., a Delaware limited partnership
)
)
)
Defendants.
ADAM NEUMANN and WE
HOLDINGS LLC, a Delaware limited
liability company

VERIFIED COMPLAINT
Plaintiffs Adam Neumann and We Holdings LLC (together,
“Plaintiffs”), by and through their undersigned counsel, for their verified complaint
against defendants SoftBank Group Corp. (“SBG”) and SoftBank Vision Fund
(AIV M1) L.P. (“SBVF”), upon knowledge as to themselves and upon information
and belief as to all other matters, allege as follows:
NATURE OF THE ACTION
1.

After taking control of The We Company (“WeWork”), SBG and

SBVF deprived Plaintiffs and other shareholders of billions of dollars that SBG
promised to pay.
2.

On October 22, 2019, WeWork, Plaintiffs, SBG, and SBVF signed a

Master Transaction Agreement (the “MTA”). In exchange for tremendous benefits

 and control over WeWork, SBG and SBVF committed that WeWork’s
shareholders would receive liquidity for their shares in the form of a tender offer
(the “Tender Offer”). Plaintiffs upheld their end of the bargain under the MTA.
SBG and SBVF did not. This Court should hold SBG and SBVF accountable for
breaching their contractual commitments and fiduciary duties.
3.

The MTA includes a series of integrated transactions that resulted in

Mr. Neumann stepping down as Chairman of the board of directors at WeWork
(the “Board”) and turning control of WeWork and the Board over to SBG and
SBVF. In doing so, Mr. Neumann put his trust in SBG and SBVF to be stewards of
WeWork, which he—and thousands of others—had worked so hard to build.
4.

In return, a key component of the consideration Mr. Neumann and

other shareholders received in the MTA was the Tender Offer, which required
SBG to offer to buy up to $3 billion of WeWork shares for at least $19.19 per
share. Absent SBG’s commitment to the Tender Offer, Plaintiffs would not have
entered the MTA, and SBG and SBVF would not have gained control of WeWork.
5.

After gaining control of WeWork and the Board, SBG and SBVF

reneged on their promise to pay for the benefits they had already received. On
April 2, 2020, SBG’s designee issued a “Notice Regarding Termination and
Withdrawal of Offer to Purchase Equity Securities of The We Company” (the

2

 “Notice”), stating that “the tender offer is terminated.” SBG also issued a press
release announcing the termination of the Tender Offer (the “Release”).
6.

The abuses committed by SBG and SBVF are so brazen that they have

prompted legal action by a Special Committee of WeWork’s Board (“Special
Committee”), comprised of two directors unaffiliated with SBG and SBVF. On
April 7, 2020, the Special Committee sued SBG and SBVF for breaching their
fiduciary duties and for violating the MTA by failing to complete the Tender Offer.
In response, SBG and SBVF doubled down on their abuse of power, demanding
that the Board “act expeditiously to confirm that the Special Committee is not
authorized to file a lawsuit on behalf of WeWork” (emphasis added), and insisting
that the SBG- and SBVF-controlled Board should make the call. In real time, SBG
and SBVF are abusing their control of WeWork in an effort to stop the Special
Committee’s meritorious lawsuit from being heard.
7.

Plaintiffs respectfully request that this Court find that SBG and SBVF

breached their contractual and fiduciary obligations to Plaintiffs; order SBG to
specifically perform its obligation to complete the Tender Offer; and further order
SBG and SBVF to provide Plaintiffs such equitable and monetary relief as this
Court deems appropriate.

3

 THE PARTIES
8.

Plaintiff Adam Neumann is an individual. Mr. Neumann was

WeWork’s Chief Executive Officer and Chairman of the Board until he
relinquished these roles, became a Board observer, and gave a voting proxy to the
Board (now controlled by SBG and SBVF), all as part of the integrated
transactions entered in October 2019.
9.

Plaintiff We Holdings LLC is a limited liability company formed

under the laws of Delaware, of which Mr. Neumann is a managing member.
10.

Defendant SoftBank Group Corp. is a corporation incorporated under

the laws of Japan and headquartered in Tokyo, Japan. SBG is publicly traded. As
of October 30, 2019, SBG owned 31.0% of WeWork’s equity, on a fully diluted
basis (including, as described below, preferred stock issued in connection with
equity financing for WeWork). Masayoshi Son founded SBG’s predecessor in
1981 and has always served as SBG’s Chairman and Chief Executive Officer. It
has been reported that Mr. Son directly owns approximately 22% of SBG, and
owns another 4.8% through asset management vehicles.
11.

At the end of 2019 and into 2020, SBG’s financial condition was

deteriorating, which no doubt influenced its decision to renege on its obligations to
WeWork. Its stock price on February 10, 2020 was 5,140 yen, which fell to 2,687
yen by the close on March 19, 2020, a drop of nearly 50% in 29 days. The plunge

4

 in the price of SBG stock threatened to expose Mr. Son to margin calls. Over that
same time, the cost of insuring SBG’s senior debt over a 5-year period rose from
196 basis points per annum to 532 basis points. On March 25, 2020, SBG received
a significant ratings downgrade from Moody’s, and in response, asked Moody’s to
withdraw its coverage of the company. It was reported on April 9, 2020 that as of
March 19, 2020, Mr. Son had pledged as collateral an additional 57 million shares
he owned in SBG to various banks. On April 13, 2020, twelve days after the
Notice, SBG announced that for the fiscal year ending in March 2020, it forecast
negative operating income of 1.35 trillion yen ($12.5 billion), which SBG said was
mainly attributable to the expected recording of an investment loss of 1.8 trillion
yen ($16.8 billion) at SBVF for the year.
12.

Defendant SoftBank Vision Fund (AIV M1) L.P. was founded by Mr.

Son and is a limited partnership organized under the laws of Delaware. SBVF is a
venture capital fund that is controlled by SBG. SBG and SBVF frequently invest in
tandem, as in the case of WeWork. As of October 30, 2019, SBVF owned 11.0%
of WeWork’s equity, on a fully diluted basis (including, as described below,
preferred stock issued in connection with equity financing for WeWork).
13.

SBG and SBVF are under common control. SBVF’s website describes

SBVF’s “Leadership” as comprised of three people: Mr. Son, Ron Fisher, and
Rajeev Misra. Mr. Fisher has been a member of SBG’s board of directors since

5

 1997 and Vice Chairman of SBG since 2017. Mr. Fisher also joined WeWork’s
Board in 2017 and resigned on December 31, 2019. Mr. Misra has been a member
of SBG’s board of directors since 2017 and an Executive Vice President of SBG
since 2018, and he was briefly a member of WeWork’s Board from January 13-15,
2020.
14.

SBVF is managed by its general partner, SB Investment Advisers

(UK) Limited (SBIA UK), which is wholly owned by SBG. As general partner,
SBIA UK makes investment decisions for SBVF through a three-person
Investment Committee, two of whose members are Messrs. Son and Misra. The US
arm of SBIA UK is headed by Mr. Fisher.
15.

SBVF has received more than $30 billion in investments from SBG,

Mr. Son, and other SBG executives. Consistent with their common ownership and
control, SBG and SBVF frequently coordinate to make parallel investments in the
same companies. WeWork is one of those investments in which SBG and SBVF
are united in control.
16.

From October 30, 2019 to the present, SBG and SBVF have

controlled WeWork’s Board. As a result of the MTA, SBG and SBVF have the
right to appoint up to five directors to the Board. Although the Board has a
maximum of ten seats, at no point since the MTA was signed has WeWork had
more than eight Board members. From October 30, 2019 until December 31, 2019,

6

 at least four of the eight directors were either appointed by or beholden to SBG or
SBVF—Marcelo Claure (member of SBG’s board of directors and SBG’s Chief
Operating Officer and an Executive Vice President), Ron Fisher (SBG designated
director), Jeff Sine (financial advisor to SBG), and Mark Schwartz (recent SBG
director, formerly SBG’s Board designee, and Mr. Son’s close friend and longtime confidant who kept Mr. Son informed about Board activities).
17.

By April 1, 2020, although some Board members had changed, the

Board remained in SBG’s and SBVF’s control because at least five of the eight
directors were either appointed by or beholden to SBG or SBVF—Marcelo Claure,
Jeff Sine, Sandeep Mathrani (hired by SBG/SBVF-controlled Board and reports to
Mr. Claure), Kirthiga Reddy (SBVF partner), and Chad Fentress (SBG’s Chief
Compliance Officer). In addition, because SBG and SBVF required Plaintiffs to
give the Board a proxy over their significant WeWork stock, SBG and SBVF also
had obtained voting control of WeWork.
18.

As of October 30, 2019, SBG and SBVF held 42.0% of WeWork

equity, on a fully diluted basis. After the MTA was amended on December 27,
2019, SBG and SBVF received penny warrants for another 129,887,919 shares of
WeWork. By April 1, 2020, SBG and SBVF held more than 52% of WeWork
equity, on a fully diluted basis.

7

 JURISDICTION
19.

This Court has subject matter jurisdiction pursuant to 10 Del. C. §

341. Plaintiffs seek equitable relief. This includes, without limitation, seeking an
order by this Court that SBG must specifically perform its obligations under the
MTA to complete the Tender Offer.
20.

In Section 11.08(b) of the MTA, the parties irrevocably and

unconditionally consented and submitted to the exclusive jurisdiction of Delaware
courts in respect of any action arising out of, relating to, or in any manner
connected with the MTA or its transactions.
FACTUAL ALLEGATIONS
I.

ADAM NEUMANN & WEWORK
21.

Mr. Neumann co-founded WeWork and served as its Chief Executive

Officer from its inception until September 2019. In that time, WeWork grew
significantly. Its membership base grew by over 100% every year starting in 2014.
In 2017, WeWork achieved $1 billion of run-rate revenue, which grew to $3.3
billion by June 2019. As of June 1, 2019, WeWork’s members included 51% of the
Fortune 100 and 38% of the Fortune 500. By year-end 2019, WeWork had 740
locations across 140 cities in 37 countries, as well as over 660,000 total
memberships.
22.

Through the years, WeWork’s success attracted investments from

institutional investors and financial institutions, including Rhône Group,
8

 Benchmark, Jefferies Financial Group, JPMorgan, Goldman Sachs, Wellington
Management, and Fidelity.
II.

THE OCTOBER 2019 TRANSACTIONS
23.

In October 2019, WeWork needed funding. The Special Committee

recommended a funding proposal from SBG and SBVF where they would take
control of WeWork in exchange for providing financing to WeWork and liquidity
to WeWork shareholders through the Tender Offer.
24.

As part of the October 2019 transactions, Mr. Neumann agreed to step

down as Chairman of the Board and Plaintiffs agreed to relinquish control to SBG
and SBVF. In exchange for giving up significant governance rights, Plaintiffs and
other WeWork shareholders were promised liquidity through the Tender Offer and
financing for the Company.
25.

The financing and tender offer transactions were described in the

MTA and had three sequential parts:
a.

First, the MTA called for an acceleration of funding of a pre-

existing agreement under which SBG or their affiliates were to provide $1.5 billion
in equity financing to WeWork. SBG had previously committed to make a $1.5
billion investment in April 2020 at a price of $110 per share. After initially
threatening not to honor its commitment, SBG agreed to accelerate the funding to

9

 October 2019 in exchange for WeWork preferred stock at an 89% reduced price
per share from the prior agreement.
b.

Second, “[p]romptly following” this funding, the MTA required

SBG or its designee to complete the Tender Offer, providing liquidity to Plaintiffs
and other WeWork minority shareholders.
c.

Third, the MTA required that “[c]ontemporaneously with or

immediately following” the closing of the Tender Offer, SBG and/or its affiliate(s)
committed to provide WeWork with up to $5.05 billion in debt financing (the
“Debt Financing”), which included the purchase of up to $1.1 billion of WeWork’s
senior secured notes.
26.

As part of the MTA’s transactions, Plaintiffs relinquished control of

WeWork and the Board to SBG and SBVF:
a.

The Board was reconstituted to give SBG and SBVF five

nominees (at least one of whom would be from SBVF), including WeWork’s
Executive Chairman, out of a possible ten directors (although only eight seats are
currently filled). Because of these changes, SBG currently controls four of eight
directors by itself, and, with SBVF, controls five of eight current directors.
b.

The SBG/SBVF-controlled Board also obtained a proxy over

Plaintiffs’ WeWork stock, which gave SBG and SBVF voting control. SBG and

10

 SBVF also benefitted from a reduction of the votes accorded to Plaintiffs’ “high
vote” stock.
III.

THE MTA TRANSACTIONS WERE INTEGRATED &
CAREFULLY SEQUENCED
27.

The MTA transactions were integrated. Plaintiffs ceded their valuable

governance rights described above in consideration for SBG’s agreement that it
would complete the Tender Offer. These were all facets of a single deal, which
SBG and SBVF reneged on despite the Company’s and Plaintiffs’ performance of
their obligations under the MTA.
28.

The integrated nature of these transactions is confirmed by the MTA’s

plain and unambiguous language. MTA Section 1.01 defines “Transactions” as
“[t]he transactions contemplated by” the MTA, including the $1.5 billion in equity
financing, the JV Roll-Ups (described below), the Tender Offer, the debt financing,
“and the other transactions contemplated by the other Transaction Agreements.”1
29.

The timing of the transactions called for by the MTA was also an

important aspect of the integrated deal. Section 1.02 of the MTA is captioned
“Sequencing of Financing Transactions.” It states that the $1.5 billion in equity
1

The MTA defines “Transaction Agreements” to include, inter alia, the MTA
and the Amended and Restated Stockholders’ Agreement dated as of October 30,
2019 (the “Stockholders’ Agreement”), under which Plaintiffs gave the Board a
proxy, as well as the agreements entered in connection with the debt financing, and
the “AN Agreements” to which WeWork is a party. The MTA defines these “AN
Agreements” to include the Omnibus Agreement dated as of October 22, 2019,
under which Mr. Neumann relinquished his position as Chairman of the Board.
11

 financing “will be the first financing transaction to occur,” and “[f]ollowing” this,
“the Tender Offer will be commenced.” Then, “[f]ollowing the acceptance” of
WeWork stock for purchase by SBG or its designee in the Tender Offer, “the Debt
Financing will be made available to [WeWork].”
30.

On October 23, 2019, the morning after the MTA was executed,

WeWork Executive Chairman Marcelo Claure (who is also a member of SBG’s
board of directors, and is SBG’s Chief Operating Officer and an Executive Vice
President) acknowledged the interdependence of the transactions called for by the
MTA at an all-hands meeting of WeWork employees. In response to an
employee’s question, he said:
[W]e believe so much in this company that we’re going
to put a tender of $3 billion for any shareholder that
wants to go sell their shares.
Why are we doing this? Because when Masa, we
decided that we need shareholders that share the same
vision and passion with us [sic]. The amount of fight
between shareholders, the amount of different opinions
that there are. We want to make sure that people
understand we’re here to grow WeWork and to make it
profitable and to create a company that’s going to be one
of the most valuable companies in life. But to do that, we
want to make sure that any shareholder that wants to
leave, we’re going to issue a tender and they’re going to
have the ability to sell their shares.
...
Adam had voting rights of 10 to 1, meaning Adam could
do whatever he wanted. He had total autonomy for good
12

 or for bad, to do anything that he wanted, and Adam has
agreed to relinquish all his votes in favor of the board. He
has relinquished being the chairman. And he has
relinquished even being in the board of directors. He will
now only be an observer with basically no voting rights.
And that has a price and we thought that’s going to be
a great investment to basically put the company back
into our hands.
(emphasis added). SBG and SBVF received the votes and control that Mr. Claure
admitted was Defendants’ goal, but they refuse to pay the agreed-upon price.
IV.

SBG & SBVF RENEGE ON THEIR MTA OBLIGATIONS
A.

The MTA Made the Debt Financing Contingent Upon
the Tender Offer Being Completed

31.

After signing the MTA, activist investors and market forces pressured

SBG to reduce its investments in companies like WeWork. This posed a problem
for SBG because the MTA required SBG to pay over $7 billion in connection with
both the Tender Offer and the follow-on Debt Financing. So SBG decided to avoid
the $3 billion cost of the Tender Offer and it instead chose to proceed directly with
the Debt Financing. Unlike the Tender Offer, the Debt Financing not only provided
SBG with penny warrants for more WeWork stock, but it also provided liquidity to
WeWork. This protected SBG and SBVF’s multi-billion-dollar WeWork
investment, while further solidifying their control of WeWork. It also provided
SBG an excuse to avoid an additional $1.1 billion in additional debt financing.
32.

The problem SBG and SBVF faced was that the MTA did not allow

SBG to do the Debt Financing before closing the Tender Offer. MTA Section 4.01
13

 required that the “Debt Financing” from SBG to WeWork could only be provided
“[c]ontemporaneously with or immediately following” the closing of the Tender
Offer. (emphasis added). This timing was intentional, as it prevented SBG, SBVF,
and WeWork from obtaining the benefits of the Debt Financing until SBG closed
the Tender Offer. To change this sequencing, SBG and SBVF needed the
Plaintiffs’ consent, because MTA Section 10.04 required Plaintiffs’ written consent
for any amendment to the MTA that adversely changed the terms of the
transactions to Plaintiffs.
33.

In late December 2019, SBG’s lawyers approached Plaintiffs’ lawyers

to seek their permission to amend the MTA to allow the Debt Financing to occur
“before or after” the Tender Offer. In seeking Plaintiffs’ consent, SBG provided a
draft amendment that included representations by all Parties that everyone—
including SBG and SBVF—had used their reasonable best efforts to meet various
closing conditions to the Tender Offer.
B.

SBG & SBVF Did Not Use Reasonable Best Efforts to
Meet The Tender Offer Closing Conditions

34.

At the same time that SBG and SBVF were asking Plaintiffs and the

Special Committee to amend the MTA and telling them that they were using their
best efforts to get the Tender Offer completed, SBG and SBVF were secretly
taking actions to undermine it.

14

 35.

One of the closing conditions to the Tender Offer was the completion

of a “roll up” of two of WeWork’s joint ventures in Asia (the “JV Roll-Up”), one
of which was in China (the “China Joint Venture”). The MTA required SBG and
SBVF to take steps to ensure that the JV Roll-Ups closed. Section 8.12 of the MTA
provides that WeWork, SBG, and SBVF shall cause their affiliates to “use
reasonable best efforts” to finalize the JV Roll-Up Documents ten days after the
completion of the $1.5 billion in equity financing. The covenant also provides that
WeWork, SBG, and SBVF agree to cause the JV Roll-Ups to close by the time the
Tender Offer closes. Similarly, Section 8.03(a) of the MTA required SBG and
SBVF to use their “reasonable best efforts” to do “all things necessary” to cause
the Tender Offer Commencement Conditions to be satisfied as promptly as
reasonably practicable and “to consummate and make effective as reasonably
promptly as reasonably practicable . . . the Transactions” (including the Tender
Offer).2
36.

Yet, as described in the Special Committee’s Complaint, by late

December 2019, SBG and SBVF had stopped using their reasonable best efforts to

2

Further, Section 8.09 of the MTA required SBG and SBVF to use their
“reasonable best efforts” to take all actions to enter the Transaction Agreements
(defined to include the JV Roll-Up Documents). According to the MTA, SBG
cannot avoid the Tender Offer if the failure to close the JV Roll-Ups “results from
any breach of [the MTA] by” SBG or SBVF.

15

 get the China Joint Venture done. Instead, SBG and SBVF repeatedly failed to
follow up with China Joint Venture investors who wanted to discuss the
transaction. This is not surprising because, on information and belief, SBG,
including through Mr. Son, communicated with investors in the China Joint
Venture and used their influence to pressure investors not to waive rights of first
refusal and co-sale rights—which would prevent the roll-up. Tellingly, SBG
focused on a different transaction that would allow SBG and SBVF to avoid
investing additional funds in the China Joint Venture and give them an excuse for
refusing to close the Tender Offer. According to the Special Committee’s
Complaint, as “early as November 2019, SoftBank had began to pursue an
alternative financing transaction with Trustbridge Partners (“Trustbridge”), a
significant minority stockholder of [the China Joint Venture]” rather than using its
reasonable best efforts to close the China Joint Venture.
37.

Unbeknownst to Plaintiffs and as explained in the Special

Committee’s Complaint, at the exact same time that SBG and SBVF were asking
Plaintiffs to sign an amendment confirming that SBG and SBVF were using their
reasonable best efforts to meet the Tender Offer closing conditions, “Son, Claure,
Michel Combes (the CEO of SoftBank-owned Sprint), and others held an in-person
meeting with representatives of Trustbridge in furtherance of the” deal that would
have interfered with closing the China Joint Venture.

16

 38.

SBG and SBVF took these actions in breach and knowing violation of

their obligations under Sections 8.03(a), 8.09, and 8.12 of the MTA and their
fiduciary obligations with the hope of creating a pretext to terminate the Tender
Offer.
39.

During the negotiations regarding the MTA amendment and contrary

to their obligations to their fiduciaries, neither SBG nor SBVF disclosed to
Plaintiffs that they were undermining the China Joint Venture. On the contrary,
SBG and SBVF assured Plaintiffs in the very text of the proposed amendment that
they had made best efforts to complete it. Plaintiffs would have never even
considered amending the MTA if they had known that SBG and SBVF were not
committed to closing the China Joint Venture and the Tender Offer.
C.

SBG & SBVF Amend the MTA Without Plaintiffs’
Signature

40.

After several rounds of negotiations, during which Plaintiffs

attempted to negotiate their own benefits for changing the MTA’s agreed-upon
transaction sequencing, SBG, SBVF and Plaintiffs could not come to terms on an
MTA amendment. Nevertheless, in blatant disregard for the MTA’s contractual
provisions and SBG’s and SBVF’s duties to Plaintiffs, SBG and SBVF went ahead
with the amendment anyway. SBG and SBVF signed Amendment No. 1 to the
MTA (the “Amendment”) on December 27, 2019. Marcelo Claure, who at that
time also served as WeWork’s Executive Chairman, signed the Amendment for
17

 SBG. Plaintiffs did not sign or agree to the Amendment and reserved all rights if
SBG and SBVF proceeded to violate the MTA. In response, SBG and SBVF
simply removed Plaintiffs’ signature block from the document.
41.

Pursuant to the Amendment, Section 4.01 of the MTA was changed to

permit the Debt Financing to be made available “before or after” the closing of the
Tender

Offer.

(emphasis

added).

The

Amendment

also

still

included

representations stating that SBG and SBVF had used their reasonable best efforts
to satisfy certain JV Roll-Up conditions. It also included an extension of the
Tender Offer closing date to April 1, 2020, an arbitrary date that has no basis in the
MTA. (According to MTA Section 3.01(a), the initial expiration of the Tender
Offer was 20 business days after the Tender Offer’s commencement, which was
November 22, 2019.)
42.

The result of the Amendment was that SBG and SBVF used their

control position at WeWork to conceal their efforts to frustrate a Tender Offer
Closing Condition and to leapfrog the Debt Financing ahead of the Tender Offer.
With the Amendment in hand, an SBG affiliate committed to purchase WeWork’s
senior unsecured notes, SBG committed to provide a letter of credit facility for
WeWork, and SBG was issued penny warrants for 129,887,919 shares of
WeWork’s Series H-3 and/or Series H-4 preferred stock.

18

 43.

SBG’s and SBVF’s actions violated the MTA’s careful sequencing of

the transactions for the benefit of SBG and SBVF, and deprived Plaintiffs and
WeWork’s other minority shareholders of a material benefit bargained for as part
of the MTA. These actions protected SBG’s and SBVF’s equity in the thenfinancially starved WeWork and relieved SBG of its $3 billion commitment to
close the Tender Offer before any Debt Financing.
44.

SBG’s and SBVF’s actions also showed a disregard for their fiduciary

duty to be candid with the Special Committee and Plaintiffs and to fully disclose
that SBG was pursuing a transaction contrary to a Tender Offer Closing Condition
at the same time that SBG negotiated the MTA amendment, and at the same time
that SBG and SBVF were asking the parties to confirm that they had been
complying with their promise to use reasonable best efforts to meet the closing
conditions.
45.

As

the

Special

Committee

explained

in

its

Complaint,

“Softbank has repeatedly used its influence over the Company to limit the
Company’s options and force it into favorable outcomes for SoftBank, to the
detriment of the Company’s minority stockholders.” The Amendment is a clear
example of how SBG and SBVF used their control and deceit to create a result that
was in SBG’s and SBVF’s best interests, but that disregarded the best interest of
Plaintiffs and other minority shareholders.

19

 D.

SBG & SBVF Terminate the Tender Offer on April 2,
2020

46.

While Plaintiffs and hundreds of other minority shareholders tendered

their shares as part of the Tender Offer, SBG did not uphold its end of the bargain.
On April 2, 2020, after SBG already obtained benefits from numerous MTA
Transactions—including part of the Debt Financing, the issuance of penny
warrants for hundreds of millions of shares of WeWork stock, and the proxy over
Plaintiffs’ stock—SBG’s designee sent the Notice terminating the Tender Offer.
SBG’s reasons for terminating the Tender Offer were pretextual and disregarded its
MTA commitments.
47.

The Notice relies on the failure to satisfy closing conditions specified

in the MTA. But none of these excuses holds up. In truth, the conditions cited by
SBG’s designee were satisfied at the time of the Notice, have since been satisfied
within the time allotted under the MTA, or have been stymied by SBG’s and
SBVF’s own breaches of contract. The latter includes the closing condition related
to completion of the China Joint Venture.
E.

SBG Offers Pretextual Excuses to Terminate the
Tender Offer

48.

As explained below, none of the conditions cited in the Notice

provides a legitimate basis to terminate the Tender Offer.

20

 49.

The Tender Offer was subject to the “Tender Offer Conditions”

contained in MTA Schedule 3.01(a). The Notice cited seven of these conditions
(by paragraph number in Schedule 3.01(a)) as purportedly unsatisfied.
50.

Paragraphs 1(b), 1(d), & 1(f): Paragraph 1(b) relates to the non-

occurrence of an “Event of Default” under the documents governing WeWork’s
indebtedness. Paragraph 1(d) states as a condition that there has been no
liquidation, reorganization, debt arrangement, dissolution, composition or
readjustment of debts, bankruptcy, insolvency, winding up, or similar event as to
WeWork. And Paragraph 1(f) states as a condition that there has been no material
breach by WeWork under the MTA. Because there was none, the Notice did not
identify any Event of Default under Paragraph 1(b) or any event identified in
Paragraph 1(d) that would prevent these conditions from being met, nor have SBG
or SBVF identified a material breach by WeWork.
51.

Paragraph 1(e) relates to proceedings or investigations pending or

currently threatened that would reasonably be expected to result in a material
liability or material adverse effect to WeWork, SBG, or SBVF or the
consummation of the Tender Offer.3 Because there was none, the Notice did not

3

Another condition cited in the Notice is in Paragraph 2(a) of Schedule
3.01(a), which reiterates the conditions described above in paragraphs 1(b) and
1(d)-1(f), and adds the condition in paragraph 1(c)—that there be no government
order enjoining or prohibiting consummation of the Tender Offer, or law which
21

 identify any proceedings, investigations, or litigation that fit the narrow criteria of
Paragraph 1(e), and certainly none that SBG and SBVF were unaware of in
October 2019 when they signed the MTA, or in December 2019 when they signed
the Amendment.
52.

Paragraph 2(b) is the Regulatory Approval Condition (the “RAC”),

which states that antitrust approvals applicable to the Tender Offer in various
jurisdictions have been obtained. The JV Roll-Up Documents (described above)
for a joint venture of WeWork known as the Pacific Joint Venture were signed on
March 31, 2020. On April 17, 2020, WeWork advised that it had obtained approval
from the Mexican antitrust regulators, which was the last regulatory step needed
for the Pacific Joint Venture. Although antitrust approval was not obtained from
Mexican authorities by April 1, 2020, this was not a basis for SBG to terminate the
Tender Offer because Section 3.01(b) of the MTA required SBG or its designee to
extend the Tender Offer deadline through the Tender Offer Outside Date of August
29, 2020 if the RAC was not satisfied or waived.
53.

Paragraph 2(c) states as a condition that each JV Roll-Up Document

has been executed, and the transactions contemplated by them have been
consummated. The MTA defines the JV Roll-Up Documents as share purchase
(. . . continued)
makes consummation of the Tender Offer illegal or prohibited. There is no such
order or law.
22

 agreements for WeWork’s China Joint Venture and Pacific Joint Venture, and
defines the JV Roll-Ups as the transactions contemplated by these agreements. As
to the Pacific Joint Venture, as described above, all conditions for closing have
been met. As to the China Joint Venture, as described above, SBG and SBVF
materially contributed to the failure to timely complete the roll-up.
54.

In addition to the reasons above contained in the Notice, SBG’s

Release also claimed actions by governments around the world related to COVID19 created an unfulfilled closing condition. SBG’s attempt to exploit the global
health pandemic as an excuse is baseless. The MTA’s Tender Offer Conditions
contain no force majeure or general material adverse effect clause that is or could
be related to COVID-19 or any other circumstance.
F.

The Parties Agreed to Specific Performance in the
MTA

55.

In Section 11.10 of the MTA, SBG and SBVF agreed that if the

Tender Offer was not consummated in accordance with the terms of the MTA and
the other transaction agreements, “irreparable damage would occur, no adequate
remedy at Law would exist and damages would be difficult to determine.” Thus,
SBG and SBVF agreed that the parties “shall be entitled to an injunction, specific
performance or other equitable relief to prevent breaches” of the MTA or the other
transaction agreements, “and to enforce specifically the terms and provisions” of
the MTA and the other agreements.
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 56.

Ensuring the ability to enforce the parties’ obligations to close the

MTA’s integrated transactions was of critical importance. Accordingly, in Section
11.10 of the MTA, the parties agreed not to “assert that a remedy of injunctive
relief, specific performance or other equitable relief is unenforceable, invalid,
contrary to Law or inequitable for any reason, [or] to assert that a remedy of
monetary damages would provide an adequate remedy.”
COUNT I
(BREACH OF THE MTA AND SPECIFIC
PERFORMANCE AGAINST SBG)
57.

Plaintiffs repeat and reallege the allegations of paragraphs 1 through

56 as if fully set forth herein.
58.

The MTA is a binding contract between, among others, SBG and

Plaintiffs.
59.

Plaintiffs have performed their obligations under the MTA.

60.

SBG materially breached the MTA, including but not limited to

Sections 1.02, 3.01, 4.01, 8.03, 8.09, 8.12, and 10.04, by, among other things,
amending the MTA without Plaintiffs’ consent, not using its reasonable best efforts
to timely finalize the JV Roll-Up Documents, not causing the JV Roll-Ups to
timely close, not extending the time to satisfy the RAC, and refusing to close and
terminating the Tender Offer.

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 61.

All of the conditions to the commencement and the closing of the

Tender Offer in MTA Schedule 3.01(a), including those cited in the Notice, were
satisfied; or did not provide a basis for SBG to terminate the Tender Offer, because
SBG or its designee was contractually required to allow the other parties to the
MTA more time to satisfy them; or SBG’s own conduct materially contributed to
the supposed “condition failure.”
62.

At a minimum, SBG’s deliberate conduct with certain investors in the

China Joint Venture contributed materially to the failure to complete the roll-up of
that venture. SBG’s actions violated its obligations under the MTA, including its
reasonable best efforts obligations under Article VIII. As to the roll-up of the
Pacific Joint Venture, WeWork advised on April 17, 2020 that regulatory approval
from the Mexican antitrust authorities had been obtained. The MTA required SBG
or its designee to extend the closing date of the Tender Offer to allow this approval
to be obtained, through August 29, 2020.
63.

As SBG contractually agreed in MTA Section 11.10, Plaintiffs have

no adequate remedy at law. Damages would be inadequate. The only way to
provide Plaintiffs with the intended benefit of their bargain in the MTA would be
for this Court to order SBG to specifically perform its MTA obligations and
complete the Tender Offer.

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 64.

Therefore, this Court should: (a) declare that all of the conditions to

the commencement and the closing of the Tender Offer set forth in the MTA were
satisfied, or did not provide SBG with a basis to terminate the Tender Offer
because SBG or its designee was contractually required to allow the other MTA
parties more time to satisfy them, or that SBG’s actions materially contributed to
the failure to satisfy them and thus any such failure is excused as a matter of law;
(b) declare that SBG materially breached the MTA, and knowingly and
intentionally breached its obligations under the MTA; and (c) order SBG or its
designee to specifically perform SBG’s obligations under the MTA and complete
the Tender Offer.
65.

In WeWork’s lawsuit against SBG and SBVF, the parties agreed that,

notwithstanding the Tender Offer Outside Date of August 29, 2020, specific
performance will still be an effective remedy on WeWork’s claims if ordered by
this Court at or after the trial scheduled for January 2021. The Court acknowledged
this stipulation at the hearing on April 17, 2020 (“the parties have agreed that
expiration of the tender offer outside date will not be asserted as a defense to the
Court's ability to order specific performance of the tender offer”).
66.

In the alternative, if this Court does not order specific performance,

then based on the injuries which SBG inflicted on Plaintiffs by its material
breaches of the MTA, including its termination of the Tender Offer, Plaintiffs

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 respectfully request that this Court order that SBG pay money damages to
Plaintiffs.
COUNT II
(BREACH OF THE MTA AGAINST SBVF)
67.

Plaintiffs repeat and reallege the allegations of paragraphs 1 through

66 as if fully set forth herein.
68.

The MTA is a binding contract between, among others, SBVF and

Plaintiffs.
69.

Plaintiffs have not breached any obligation under the MTA.

70.

SBVF materially breached the MTA, including Sections 1.02, 8.03,

8.09, 8.12, and 10.04, by, among other things, amending the MTA without
Plaintiffs’ consent, not using its reasonable best efforts to timely finalize the JV
Roll-Up Documents, and not causing the JV Roll-Ups to timely close.
71.

The conditions to the commencement and the closing of the Tender

Offer cited in the Notice were satisfied, or SBVF’s own conduct materially
contributed to the supposed “condition failure.”
72.

Therefore, this Court should: (a) declare that all of the conditions to

the commencement and the closing of the Tender Offer in the MTA were satisfied,
or SBVF’s actions materially contributed to the failure to satisfy them and thus any
such failure is excused as a matter of law; (b) declare that SBVF materially
breached the MTA, and knowingly and intentionally breached its obligations under
27

 the MTA; and (c) order such other equitable relief as to the Court may appear just
and proper, including a declaration that the roll-up of the China Joint Venture is
legally excused as a condition to complete the Tender Offer.
73.

In the alternative, based on the injuries which SBVF inflicted on

Plaintiffs by its material breaches of the MTA, including its failures to comply
with its reasonable best efforts obligations and other obligations under Article VIII
in respect of the roll-up of the China Joint Venture, Plaintiffs respectfully request
that this Court order that SBVF pay money damages to Plaintiffs.
COUNT III
(BREACH OF FIDUCIARY DUTY AGAINST ALL DEFENDANTS)
74.

Plaintiffs repeat and reallege the allegations of paragraphs 1 through

73 as if fully set forth herein.
75.

SBG and SBVF constitute a controlling group of shareholders from at

least October 22, 2019 to the present and owed fiduciary duties to Plaintiffs.
76.

SBG and SBVF have exercised their control to the detriment of

Plaintiffs. SBG and SBVF violated their duties to Plaintiffs by, among other things,
restructuring the sequence of transactions in the MTA, relieving themselves of the
obligation to complete the Tender Offer in order to engage in the Debt Financing
with WeWork, and misrepresenting and concealing material information regarding
SBG and SBVF’s failure to use best efforts to close the China Joint Venture. SBG
and SBVF exercised the control that they received over WeWork to preserve the
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 value of their WeWork investment, while at the same time depriving Plaintiffs of
the primary economic benefit Plaintiffs were supposed to receive—the Tender
Offer. SBG’s and SBVF’s violation of their fiduciary duties to Plaintiffs is
magnified by the fact that Plaintiffs gave up valuable governance rights in the
MTA and related transactions, and are burdened by an ongoing requirement to vote
shares in favor of the SBG-and-SBVF controlled Board. It is improper for SBG
and SBVF to retain the benefits of the MTA and use those benefits to then breach
the fiduciary duties that SBG and SBVF owe to Plaintiffs.
77.

Plaintiffs are entitled to equitable and monetary relief, including but

not limited to the proceeds they are due under the Tender Offer, and any other
relief that this Court deems just, equitable, and appropriate.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs respectfully request that this Court enter judgment
in their favor and against Defendants as follows:
a)

declaring that SBG and SBVF materially breached the MTA, and
knowingly and intentionally breached their obligations under the
MTA;

b)

declaring, as to every condition to the commencement and closing of
the Tender Offer under the MTA, that (i) it was satisfied, or (ii)
SBG’s and/or SBVF’s conduct materially contributed to its failure to

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 be satisfied, or (iii) if it was not satisfied, this did not provide SBG or
its designee a basis to terminate the Tender Offer, because it was
required to give the other parties to the MTA more time to satisfy it;
c)

declaring that SBG’s and SBVF’s conduct—including their failure to
honor their reasonable best efforts obligations at law, and their
obligations under Article VIII of the MTA—materially contributed to
the failure to complete the roll-up of the China Joint Venture, and as
such the condition to closing the Tender Offer that the roll-up of the
China Joint Venture be completed is excused under the MTA and/or
applicable law;

d)

declaring that there was no valid basis for SBG or its designee to
refuse to extend the Tender Offer until such time as the RAC was
satisfied pursuant to Section 3.01(b) of the MTA;

e)

declaring that with the receipt of regulatory approval from the
Mexican antitrust authorities on April 17, 2020, the RAC is satisfied;

f)

ordering such equitable relief as to this Court may appear just and
proper against SBG and SBVF, including without limitation an order
that SBG perform its obligations under the MTA and promptly
complete the Tender Offer;

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 g)

in the alternative, awarding damages for SBG’s and SBVF’s breaches
of the MTA, in an amount to be determined at trial combined with any
equitable relief to undo any transactions premised on the Tender Offer
closing;

h)

finding that SBG and SBVF breached their fiduciary duties to
Plaintiffs;

i)

awarding equitable relief and compensatory damages for SBG’s and
SBVF’s breaches of fiduciary duty, in a nature and amount to be
determined at trial; and

j)

awarding costs, attorneys’ fees, and other relief that this Court deems
appropriate.

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 MORRIS NICHOLS ARSHT &
TUNNELL LLP
OF COUNSEL:
Eric Seiler
Philippe Adler
Mala Ahuja Harker
FRIEDMAN KAPLAN
SEILER & ADELMAN LLP
7 Times Square
New York, NY 10036-6156
(212) 833-1100

/s/ Kevin M. Coen
William M. Lafferty (#2755)
Kevin M. Coen (#4775)
Sabrina M. Hendershot (#6286)
Sara Toscano (#6703)
1201 North Market Street
Wilmington, DE 19801
(302) 658-9200
Attorneys for Plaintiffs Adam Neumann
and We Holdings LLC

William Christopher Carmody
Shawn J. Rabin
Arun Subramanian
SUSMAN GODFREY L.L.P.
1301 Avenue of the Americas
32nd Floor
New York, NY 10019-6023
(212) 336-8330
Dated: May 4, 2020

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