SoftBank Group Corp. told shareholders of WeWork that it could withdraw from an agreement to buy $3 billion of stock in the embattled co-working business, casting doubt on a deal that had been set to close in about two weeks.

In a message to stockholders reviewed by Bloomberg, the Japanese conglomerate cited numerous government inquiries into WeWork, including those from U.S. attorneys, the Securities and Exchange Commission, attorneys general in California and New York and the Manhattan district attorney.

SoftBank’s shares slid as much as 6.5% in early Tokyo trading, weighed down also by an outlook cut by S&P Global Ratings on Tuesday. Spokeswomen for SoftBank and WeWork parent company We Co. declined to comment. The Wall Street Journal reported the email to shareholders earlier Tuesday.

This week’s notice from SoftBank raises questions about whether it may seek to negotiate a lower price, delay the purchase until the economy stabilizes or withdraw entirely. SoftBank’s stock is down 27% this month, and economists from Goldman Sachs Group Inc. and Morgan Stanley say a global recession is underway.

The worldwide market rout could hammer the value of SoftBank’s assets if it persists, S&P said in trimming the company’s outlook. The credit-rating agency said SoftBank’s plans to spend about $4.8 billion on a share buyback amid plummeting stock markets raises questions about its prioritization of financial soundness.

News Source: Livemint


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