(Reuters) - The special committee on the board of The We Company, which operates office-sharing startup WeWork, filed a lawsuit against its largest shareholder SoftBank Group Corp on Tuesday, challenging its decision to terminate a $3-billion tender offer.
Continue Reading Below
Earlier in April, SoftBank said it had terminated the tender offer for additional WeWork shares agreed last year with shareholders, plunging the startup further into crisis.
In the lawsuit, which was widely expected after the tender offer fell through, the special committee called SoftBank's decision to terminate the tender offer "wrongful" and alleged that SoftBank had breached its obligations under the master transaction agreement (MTA).
"SoftBank's failure to consummate the tender offer is a clear breach of its contractual obligations under the MTA as well as a breach of SoftBank's fiduciary obligations to WeWork's minority stockholders, including hundreds of current and former employees," the special committee said in the statement.
The tender offer, which would have mostly benefited a select group of shareholders, including ousted co-founder Adam Neumann, had been agreed in October as part of a bailout plan by SoftBank after WeWork's IPO plans imploded.
Investors have been concerned about the company's losses, Neumann's leadership style and a business model that involves taking long-term leases and renting out spaces for a short term.
"The Special Committee is seeking specific performance requiring SoftBank to complete the tender offer or, in the alternative, compensatory damages for SoftBank's breaches of contract and fiduciary duty," the special committee said.
(Reporting by Anirban Sen in Bangalore; Editing by Amy Caren Daniel)