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the blinding ascent of WeWork thwarted

The model of the American giant of coworking, which has 547 offices in the world, is being questioned.

From Jérôme Marin Posted today at 11:14 AM

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The entrance of a coworking room in WeWork, New York, January 8.
The entrance of a coworking room in WeWork, New York, January 8. Brendan McDermid / REUTERS

Do not call it WeWork anymore, but The We Company. On Wednesday, January 9, the American start-up, specialized in renting shared offices, formalized the change of the name. Aim: to focus even more on the diversification of its activities, while the economic model of its historical core activity still raises questions. "The beginning of a new story," Adam Neumann, his co-founder and boss, assures.

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However, this "rebranding" is only partial: the company retains its business name, WeWork Companies Inc. And the announcement coincides with the confirmation that the large investment that has been negotiated for several months with the Japanese conglomerate Softbank will not take place. A big fiasco for WeWork, which hoped to get 16 billion dollars (13.9 billion euros) to finance its ambitious development strategy.

In the end Softbank will invest "only" 2 billion dollars. This transaction has two phases: a traditional fundraising of $ 1 billion, based on a valuation of $ 42 billion; and the repurchase of $ 1 billion in shares held by other investors and by WeWork employees. This practice is unusual, but the Masayoshi Son group had already used it at the end of 2017 to increase its share in Uber's capital.

The codes of Silicon Valley

This brings Softbank's total investment to more than $ 10 billion. However, Mr. Son does not become the majority shareholder of WeWork, as he initially had hoped. According to the American press, the businessman faced two obstacles. Firstly, the sharp decline in the shares of his company (-35% in the fourth quarter of 2018), which would have reduced his financial flexibility with his own shareholders.

Then, the reluctance of its partners in the Vision Fund, a vehicle investment of nearly $ 100 billion that he launched in May 2017. He had already participated in a previous fundraising WeWork. And he would bring a large part of the promised $ 16 billion to the company by Mr. Son. This time, the sovereign wealth funds of Saudi Arabia and Abu Dhabi, the main contributors to the Vision Fund, vetoed the fact that the deal was too risky in times of uncertainty about global economic growth.

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