NEW YORK • WeWork, which is seeking a new chief executive to lead the co-working company’s overhaul, is in talks with T-Mobile’s John Legere, according to two people briefed on the discussions.
Mr Legere, who has been credited with reviving T-Mobile since becoming its CEO in 2012, is one of several candidates the company is considering, the people said.
After rapidly expanding its network of office spaces, WeWork was close to running out of money when it received a bailout last month from SoftBank, the Japanese conglomerate that is the firm’s largest outside shareholder.
The company is also expected to lay off thousands of employees and sell operations that are not part of its core business of subletting office space.
WeWork, which faced questions about the viability of its business model and its unusual corporate governance, called off its initial public offering in September.
Also that month, WeWork co-founder Adam Neumann stepped down as chief executive, to be replaced by Mr Sebastian Gunningham and Mr Artie Minson.
“This is further confirmation that SoftBank is not going to let this thing go up in flames,” said Ms Vicki Bryan, chief executive of research firm Bond Angle.
Any new chief executive will face a tough task turning around WeWork, which posted a US$1.4 billion (S$1.9 billion) operating loss in the first half of the year.
The company’s expenses soared as it leased new office space and spent huge sums refurbishing the locations. Nearly half of WeWork’s 600 locations were opened in the 12 months that ended in September – and it is not clear if and when they might become profitable.
Mr Legere, 61, does not have a background in commercial real estate, but at T-Mobile, he has been a disruptive force. He slashed prices, introduced new plans and heaped ridicule on rival cellphone companies such as Verizon, AT&T and Sprint. This approach has paid off for T-Mobile, which has more than doubled its subscribers since Mr Legere took control of the firm.
But Mr Legere does have a connection to SoftBank, which is led by investor Masayoshi Son. T-Mobile is seeking to merge with Sprint, which SoftBank controls. The deal has gained approval from the Department of Justice and the Federal Communications Commission, but a group of state attorneys-general has challenged the deal in the US District Court in New York.
Sprint executive chairman Marcelo Claure recently became the executive chairman of WeWork as part of SoftBank’s bailout of the company.
Significant conflicts of interest are embedded in these talks. Mr Legere is separately renegotiating the terms of T-Mobile’s acquisition of Sprint, which cannot close until the case brought by the states is resolved. The merger deadline has passed and Sprint remains a hobbled wireless business. T-Mobile’s shareholders are pressing for better terms with a lower price.
Mr Legere could have a hard time separating T-Mobile’s negotiations with Sprint from his talks with WeWork, given that SoftBank effectively controls both of those firms.
“The number of connections between these companies makes the situation highly problematic,” said Mr Craig Moffett, co-founder of research firm MoffettNathanson.
A representative for T-Mobile declined to comment.
SoftBank’s US$1.5 billion equity investment last month took its total investment in WeWork to more than US$10 billion. It is planning to spend an additional US$3 billion to buy WeWork stock from other shareholders, a transaction that would not put new money into the company.
After that tender offer, SoftBank hopes to raise US$5 billion for WeWork in a debt financing that would take the form of bond sales and bank commitments.
NYTIMES
