SAN FRANCISCO/NEW YORK (Reuters) – Japan’s SoftBank Group Corp (9984.T) is in discussions to take a majority stake in shared office space provider WeWork Cos, a source familiar with the matter said, a deal that would increase one of its biggest bets on a late-stage U.S. startup.
FILE PHOTO: An employee works behind a logo of Softbank Corp at its branch in Tokyo March 2, 2011. REUTERS/Toru Hanai/File Photo
Pricing and other details have yet to be firmed up, the source said, adding that it was not a done deal.
A second source also said SoftBank is in talks about a major new investment in WeWork. Both spoke on the condition of anonymity as the details of the talks were private.
The Wall Street Journal reported earlier that SoftBank’s investment could be between $15 billion and $20 billion and would likely come from SoftBank’s Vision Fund.
WeWork and SoftBank declined to comment.
SoftBank and its Vision Fund invested $4.4 billion in WeWork last year and the Japanese company holds two board seats.
WeWork’s prospects have been treated with skepticism by some Silicon Valley investors who see the company as an overvalued real estate play vulnerable to a property market downturn.
A majority stake by SoftBank, which has raised more than $93 billion to create the technology-focused Vision Fund, would be a shift from its more common practice of taking minority stakes in high-profile late-stage startups.
The two companies are closely entwined, with hundreds of SoftBank staff using space at the two companies’ Japanese joint venture and SoftBank considering moving its headquarters into WeWork offices.
Eight-year old WeWork is growing rapidly and in September surpassed JP Morgan (JPM.N), the biggest U.S. bank, as the largest tenant of Manhattan office space, highlighting growing demand for flexible leases.
Reporting by Heather Somerville in San Francisco and Gregory Roumeliotis in New York; Writing by Sanjana Shivdas in Bengaluru and Sam Nussey in Tokyo; Editing by Peter Cooney and Edwina Gibbs