Welcome back, Adam Neumann

Five years after stepping down as CEO, Neumann wants to buy back WeWork.

3/27/24 11:31AM

Nobody is better at capitalism than Adam Neumann. A month after his attorneys published a letter detailing Neumann’s desire to purchase WeWork out of bankruptcy, the ousted founder made a $500 million offer to buy his former company.

While the source of the financing is not yet known, Adam Neumann has extracted enough money from SoftBank, WeWork’s biggest investor who ultimately incinerated $16 billion trying to save the company, that he could afford to finance it himself.

A brief timeline of Neumann’s wealth accumulation:

In 2017, Neumann sold a $361 million stake in WeWork to SoftBank as part of the Japanese firm’s initial investment in the company. (Benchmark, one of WeWork’s first investors, also sold $315.5 million of shares to SoftBank between 2017 and 2019).
In September 2019, Neumann stepped down as WeWork’s CEO as the company’s IPO was pulled due to mounting investor pressure stemming from disclosures in its IPO filing.
In October 2019, SoftBank, determined to save its crown jewel, crafted an $8 billion dollar financing round that would have paid Neumann $970 million for his shares, $185 million in a consulting fee, and a $500 million line of credit.
In April 2020, SoftBank bailed on the deal (in which the equity proceeds would have gone to existing shareholders).
In May 2020, Neumann sued SoftBank for not paying him his roughly $1.7 billion.
In February 2021, SoftBank settled its its legal dispute with Neumann, paying him $480 million for half of his shares, as well as a $185 million payment for a non-compete agreement, $106 million in other settlement fees, and an extension on a $432 million loan, which (very important detail!) was secured by his remaining 48.5 million WeWork shares.
In October 2021, WeWork went public through a SPAC, finishing the day at $11.38. Neumann’s remaining 48.5 million shares, as well as his 19.9 million converted “WeWork Partnerships Profits Interest Units,” were worth a combined $778 million.
In November 2023, WeWork filed for bankruptcy, sending the value of Neumann’s loan collateral to near-zero, effectively allowing him to keep the hundreds of millions that he still owed SoftBank.

SoftBank, in total, paid Neumann approximately $1.5 billion between share purchases, legal fees, and a now collateral-free loan for the privilege of destroying their $16 billion dollar investment. And now Neumann could buy the whole company back for 1% of its peak valuation.

Not to be forgotten, in August 2022, Neumann also raised $350 million at a billion-dollar valuation from Andreessen Horowitz for Flow, his residential real estate startup aiming to craft community-driven living experience. Public information about Flow, which was set to launch in 2023 but has yet to publish a functioning website, is scarce, but some of its properties appear to be having cash flow issues.

Stay winning, Adam.

Max Knoblauch20h

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The company’s triumph over Netflix in the bidding war came thanks in part to financial backing from Oracle cofounder Larry Ellison, billionaire father of Paramount CEO David Ellison.

Saudi Arabia’s PIF, which last year led the $55 billion deal to take Electronic Arts private, will provide about $10 billion in the deal. The Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co. is also involved.

According to the WSJ, the funds will not receive voting rights in the combined Paramount-Warner company. Those working on the deal don’t expect the Gulf funds’ involvement to spark any additional regulatory reviews.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.