Introduction: Adam Neumann bids more than $500m for WeWork; Asos sales fall 18%
Adam Neumann, the former chief executive and co-founder of WeWork, has made an offer to buy the bankrupt co-working company for more than $500m, the Wall Street Journal reported.
He said last month he was working on a bid – five years after he was ousted from the business following a failed stock market listing.
It’s not clear how Neumann is funding the bid. Last month, Neumann’s lawyers sent a letter to WeWork’s advisers saying he was teaming up with Dan Loeb’s Third Point hedge fund and other investors in exploring a bid for the company. But Third Point is not part of Neumann’s $500m-plus bid, the Journal said.
We reported last month that lawyers representing Neumann’s new venture, Flow Global, wrote to WeWork advisers revealing he had been trying to meet with the company for months to negotiate a deal to buy back the company or provide it with debt financing.
But WeWork advisers appeared hesitant to go to the negotiating table with the company’s former CEO. Neumann’s lawyers said WeWork had had a “lack of engagement” with him and had not given him the information he needs to make an offer to purchase the company or finance its debt. The company has more than $4bn in debt, according to the New York Times.
Over here, the online fashion retailer Asos said sales fell 18% in the six months to 3 March. It said this was in line with previous guidance, and expects sales to decline by between 5% and 15% in the full year.
The company has been reducing the amount of stock it holds in an attempt to improve profitability, and reported a near £300m annual loss in November. Asos has embarked on a turnaround plan, and said today:
Good progress on implementing the Back to Fashion strategy, including action to clear aged stock and transition to the new operating model by FY25. Ahead on plan to improve stock efficiency and reduce inventory to £600m by year end.
The US faces a market shock similar to the one seen in the UK after Liz Truss’s disastrous mini-budget, unless the US government reins in the country’s ballooning federal debt, according to the head of Congress’s independent fiscal watchdog.
Phillip Swagel, director of the Congressional Budget Office, told the Financial Times that rising US debt is on an “unprecedented” trajectory and could risk a Truss-style crisis that sent borrowing costs soaring and caused a run on the pound in the autumn of 2022. Truss quit after just 45 days as UK prime minister markets took fright at her package of unfunded tax cuts.
Japan would not rule out any measures to prop up the sliding yen, its finance minister said, in the latest warning to currency speculators.
A week after the country’s historic shift away from years of negative interest rates, Shunichi Suzuki said that excess currency volatility was bad for the economy. He told journalists after a cabinet meeting:
Rapid currency moves are undesirable.
It is important for currencies to move stably, reflecting economic fundamentals.
The yen’s sell-off intensified after the Bank of Japan decided to end eight years of negative interest rates, ushering in a new era in a nation that has become used to cheap money.
A weaker yen benefits Japan’s exporters but also raises the costs of imports, can drive up inflation and squeeze households’ incomes.
The Agenda
Key events
Food price inflation in Britain slows to 4.5% but many still struggling
Grocery price inflation in Great Britain has slowed to 4.5%, its lowest level since February 2022, but one in four households are still struggling financially, retail researchers have found.
The upmarket retailers Waitrose and Ocado were the only grocers to win new shoppers in the past three months, according to the latest monthly figures from the analysts Kantar, as growth in more expensive branded groceries outstripped supermarket own label.
Waitrose’s pace of growth, at 3.9%, was faster than at the discounter Aldi – which has been the target of price-match campaigns by Tesco, Sainsbury’s, Asda and Lidl – for the first time since 2021. Only Asda, the Co-op and Iceland trailed behind Aldi’s 3.1% rise in sales, with even struggling Morrisons ahead on 3.6%.
Fraser McKevitt, the head of retail and consumer insight at Kantar, said:
Grocery inflation has come down significantly since hitting an eye-watering peak of 17% in March 2023. However, despite this continued slowdown, many British households are still feeling the squeeze. Twenty-three per cent identified themselves as struggling financially in our data – the same proportion as reported in November last year.
Lidl remains the fastest-growing high street grocer, with sales up 8.8% helped by a 24% rise in sales of baked goods and a 11% jump in fruit, vegetables and salads.
Across Britain, £605m more was spent on promotional deals this month than in March last year, while nearly a third of baskets across Tesco, Sainsbury’s and Asda collectively contained at least one product price-matched to a discounter.
Kalyeena Makortoff
Neumann was once tipped to join the ranks of the world’s richest people, crystallising a personal fortune of as much as $14bn from the planned flotation of WeWork in 2019.
During its ascendence, the company invested heavily in acquiring a series long-term leases in some of the world’s most expensive real estate markets, amassing nearly 800 locations across 39 countries.
But investors, already sceptical of the company’s nearly $50bn valuation, were ultimately put off by terms of the stock listing, including demands that each of Neumann’s shares shares should carry 20 times the votes of ordinary shares, and that his wife should have a say in selecting his successor should he die.
The IPO was eventually postponed, and Neumann later quit as chief executive, as a series of increasingly damaging allegations about his personal conduct and eccentric lifestyle, including that he smoked marijuana on a private jet, came to light.
WeWork eventually landed on the stock market in at a fraction of the valuation of $9bn in 2021.
Neumann has since returned to leadership, and unveiled plans for a property venture Flow – focused on branded apartments targeting millennial rentals – in 2022. Despite scheduling a 2023 launch, its business plan has yet to be made public, leaving its website still claiming it is “coming soon.”
More on Adam Neumann’s bid to back back the office space rental company WeWork that he co-founded in 2010.
He had tried to team up with the New York-based hedge fund Third Point, it emerged last month, but Third Point later told Reuters it had held “only preliminary conversations” with Neumann, and had not made any financial commitments towards a potential deal.
The Financial Times is reporting that Neumann has submitted a conditional bid of about $600m. His new property company, Flow, said yesterday that “a coalition of half a dozen financing partners – whose identifies are known to WeWork and its advisers – submitted a potential bid” two weeks ago.
WeWork had been valued as much as $47bn before it filed for chapter 11 in November. It remains focused on its restructuring and aims to emerge from bankruptcy in the second quarter as a “financially strong and profitable company,” the Wall Street Journal reported, citing a company spokesperson.
As we’ve said previously, WeWork is an extraordinary company and it’s no surprise we receive expressions of interest from third parties on a regular basis.
Our board and our advisers review those approaches in the ordinary course, to ensure we always act in the best long-term interests of the company.
Gazprom buys Shell’s former Sakhalin Energy stake for $1bn
The Kremlin-controlled energy giant Gazprom has bought the 27.5% stake formerly owned by Shell in the Russian liquefield natural gas producer Sakhalin Energy for around $1bn.
The Russian government said late on Monday that the 27.5% stake in Sakhalin Energy is due to be sold to a company called Sakhalin Project for 94.8bn roubles. Sakhalin Project is fully owned by Gazprom, Reuters reported, citing company filings.
Gazprom owns 50% of Sakhalin Energy, which is based in the southern tip of Russia’s Pacific island of Sakhalin. Other shareholders are the Japanese companies Mitsubishi and Mitsubishi.
Following Moscow’s invasion of Ukraine two years ago, Shell pulled out of the LNG project, and took a $1.6bn impairment charge.
Introduction: Adam Neumann bids more than $500m for WeWork; Asos sales fall 18%
Adam Neumann, the former chief executive and co-founder of WeWork, has made an offer to buy the bankrupt co-working company for more than $500m, the Wall Street Journal reported.
He said last month he was working on a bid – five years after he was ousted from the business following a failed stock market listing.
It’s not clear how Neumann is funding the bid. Last month, Neumann’s lawyers sent a letter to WeWork’s advisers saying he was teaming up with Dan Loeb’s Third Point hedge fund and other investors in exploring a bid for the company. But Third Point is not part of Neumann’s $500m-plus bid, the Journal said.
We reported last month that lawyers representing Neumann’s new venture, Flow Global, wrote to WeWork advisers revealing he had been trying to meet with the company for months to negotiate a deal to buy back the company or provide it with debt financing.
But WeWork advisers appeared hesitant to go to the negotiating table with the company’s former CEO. Neumann’s lawyers said WeWork had had a “lack of engagement” with him and had not given him the information he needs to make an offer to purchase the company or finance its debt. The company has more than $4bn in debt, according to the New York Times.
Over here, the online fashion retailer Asos said sales fell 18% in the six months to 3 March. It said this was in line with previous guidance, and expects sales to decline by between 5% and 15% in the full year.
The company has been reducing the amount of stock it holds in an attempt to improve profitability, and reported a near £300m annual loss in November. Asos has embarked on a turnaround plan, and said today:
Good progress on implementing the Back to Fashion strategy, including action to clear aged stock and transition to the new operating model by FY25. Ahead on plan to improve stock efficiency and reduce inventory to £600m by year end.
The US faces a market shock similar to the one seen in the UK after Liz Truss’s disastrous mini-budget, unless the US government reins in the country’s ballooning federal debt, according to the head of Congress’s independent fiscal watchdog.
Phillip Swagel, director of the Congressional Budget Office, told the Financial Times that rising US debt is on an “unprecedented” trajectory and could risk a Truss-style crisis that sent borrowing costs soaring and caused a run on the pound in the autumn of 2022. Truss quit after just 45 days as UK prime minister markets took fright at her package of unfunded tax cuts.
Japan would not rule out any measures to prop up the sliding yen, its finance minister said, in the latest warning to currency speculators.
A week after the country’s historic shift away from years of negative interest rates, Shunichi Suzuki said that excess currency volatility was bad for the economy. He told journalists after a cabinet meeting:
Rapid currency moves are undesirable.
It is important for currencies to move stably, reflecting economic fundamentals.
The yen’s sell-off intensified after the Bank of Japan decided to end eight years of negative interest rates, ushering in a new era in a nation that has become used to cheap money.
A weaker yen benefits Japan’s exporters but also raises the costs of imports, can drive up inflation and squeeze households’ incomes.
The Agenda
