Adam Neumann’s bid to buy back WeWork faces uphill battle due to financing challenges
Israeli-American businessman Adam Neumann speaks during The Israeli American Council (IAC) 8th Annual National Summit on January 19, 2023 in Austin, Texas.
Shahar Azran | Getty Images
Adam Neumann has sent a preliminary offer to buy WeWork out of bankruptcy for more than $500 million, five years after he was ousted by the office-sharing company he founded. But it’s not clear that he has the financing and requisite support from creditors to consummate a deal.
In trying to reclaim WeWork, Neumann has to contend with a checkered past at the company, uncertainty over funding and the difficulty in valuing a business that’s midway through a restructuring process. CNBC spoke with multiple people familiar with the company and Neumann’s offer. They requested anonymity to speak freely about private matters.
Investment firm Rithm Capital, which acquired Daniel Och’s Sculptor Capital Management in November, is one of parties interested in financing the bid, sources told CNBC. Rithm’s involvement remains preliminary and the diligence process is at an extremely early stage, one of the people said.
More broadly, people close to the matter say they’re skeptical of whether Neumann has committed financing lined up to support an offer. That’s because Neumann has previously named other financing sources in prior communications with WeWork’s advisors that hasn’t come to fruition, the sources say.
For example, Dan Loeb’s Third Point was previously cited in a letter by Neumann’s counsel to WeWork’s bankruptcy advisors as a firm that was providing financing. But the hedge fund quickly denied involvement and said discussions had only been preliminary. Third Point is not involved in any offer, people familiar with the matter told CNBC.
Baupost Group was also floated as a potential financing source months earlier but didn’t join Neumann’s latest bid, the people said. Conversations between Neumann and Baupost were preliminary and informal, one source said. The Financial Times first reported that Baupost was not involved.
WeWork declined to comment for this story. In a previous statement, the company said it received “expressions of interest from third parties on a regular basis,” and that it worked to “always act in the best long-term interests of the company.”
Neumann didn’t immediately respond to a request for comment.
Blurred lines
Neumann is represented by law firm Quinn Emanuel’s Alex Spiro, who also advises Tesla CEO Elon Musk and billionaire rapper Jay-Z. But Neumann, who once called JPMorgan Chase CEO Jamie Dimon his “personal banker,” doesn’t appear to have tapped bankers or financial advisors in his effort to buy WeWork, two people with direct knowledge of the matter said.
Adding to the confusion is Neumann’s involvement with his latest venture, Flow, which is one of the parties bidding on WeWork. Following his ouster from WeWork, Neumann founded Flow, a startup that says it’s reinventing home ownership and building a sense of community among its tenants.
Andreessen Horowitz invested a reported $350 million in Flow in 2022. Marc Andreessen, the venture firm’s co-founder, sits on Flow’s board. Andreessen Horowitz didn’t respond to a request for comment.
Neumann’s counsel is also representing Flow in WeWork’s bankruptcy proceedings. Flow and Neumann share a spokesperson, who confirmed the WeWork bid.
Questions about timing and plans
Israeli-American businessman Adam Neumann speaks during The Israeli American Council (IAC) 8th Annual National Summit on January 19, 2023 in Austin, Texas.
Shahar Azran | Getty Images
The timing of Neumann’s offer also raises questions about its viability. The bid came two weeks ago, sources said, and landed at a time when the company had yet to show a viable path to exit bankruptcy.
Sources said WeWork advisors are not currently running a bidding process for the company and are instead focused on moving through the bankruptcy proceedings in New Jersey.
Then there’s the reputational damage Neumann suffered in his waning days at the company. Prior to WeWork’s failed IPO in mid-2019, Neumann went on a fundraising and spending binge that public market investors determined was unsustainable. Even with WeWork’s business is freefall, Neumann profited handsomely.
SoftBank, WeWork’s largest investor at the time, ultimately spearheaded the ouster of Neumann, an ordeal that ended in court. SoftBank is one of WeWork’s creditors in bankruptcy court.
Neumann held significant equity in WeWork prior to its bankruptcy filing, but like other shareholders, his equity stake was wiped out. Any successful bid from Neumann would require that he first pay off secured creditors, who are first in line for repayment. Those creditors have shown no indication that they are weighing Neumann’s bid, one person said.
WATCH: WeWork founder Adam Neumann is trying to buy back the company
The X logo appears on a phone, and the xAI logo is displayed on a laptop in Krakow, Poland, on April 1, 2025. (Photo by Klaudia Radecka/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images
Elon Musk‘s xAI Holdings is in discussions with investors to raise about $20 billion, Bloomberg News reported Friday, citing people familiar with the matter.
The funding would value the company at over $120 billion, according to the report.
Musk was looking to assign “proper value” to xAI, sources told CNBC’s David Faber earlier this month. The remarks were made during a call with xAI investors, sources familiar with the matter told Faber. The Tesla CEO at that time didn’t explicitly mention any upcoming funding round, but the sources suggested xAI was preparing for a substantial capital raise in the near future.
The funding amount could be more than $20 billion as the exact figure had not been decided, the Bloomberg report added.
Artificial intelligence startup xAI didn’t immediately respond to a CNBC request for comment outside of U.S. business hours.
The AI firm last month acquired X in an all-stock deal that valued xAI at $80 billion and the social media platform at $33 billion.
“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said on X, announcing the deal. “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”
Read the full Bloomberg story here.
— CNBC’s Samantha Subin contributed to this report.
Alphabet CEO Sundar Pichai during the Google I/O developers conference in Mountain View, California, on May 10, 2023.
David Paul Morris | Bloomberg | Getty Images
Alphabet‘s stock gained 3% Friday after signaling strong growth in its search and advertising businesses amid a competitive artificial intelligence environment and uncertain macro backdrop.
“GOOGL‘s pace of GenAI product roll-out is accelerating with multiple encouraging signals,” wrote Morgan Stanley‘s Brian Nowak. “Macro uncertainty still exists but we remain [overweight] given GOOGL’s still strong relative position and improving pace of GenAI enabled product roll-out.”
The search giant posted earnings of $2.81 per share on $90.23 billion in revenues. That topped the $89.12 billion in sales and $2.01 in EPS expected by LSEG analysts. Revenues grew 12% year-over-year and ahead of the 10% anticipated by Wall Street.
Net income rose 46% to $34.54 billion, or $2.81 per share. That’s up from $23.66 billion, or $1.89 per share, in the year-ago period. Alphabet said the figure included $8 billion in unrealized gains on its nonmarketable equity securities connected to its investment in a private company.
Adjusted earnings, excluding that gain, were $2.27 per share, according to LSEG, and topped analyst expectations.
Alphabet shares have pulled back about 16% this year as it battles volatility spurred by mounting trade war fears and worries that President Donald Trump‘s tariffs could crush the global economy. That would make it more difficult for Alphabet to potentially acquire infrastructure for data centers powering AI models as it faces off against competitors such as OpenAI and Anthropic to develop largely language models.
During Thursday’s call with investors, Alphabet suggested that it’s too soon to tally the total impact of tariffs. However, Google’s business chief Philipp Schindler said that ending the de minimis trade exemption in May, which created a loophole benefitting many Chinese e-commerce retailers, could create a “slight headwind” for the company’s ads business, specifically in the Asia-Pacific region. The loophole allows shipments under $800 to come into the U.S. duty-free.
Despite this backdrop, Alphabet showed steady growth in its advertising and search business, reporting $66.89 billion in revenues for its advertising unit. That reflected 8.5% growth from the year-ago period. The company reported $8.93 billion in advertising revenue for its YouTube business, shy of an $8.97 billion estimate from StreetAccount.
Alphabet’s “Search and other” unit rose 9.8% to $50.7 billion, up from $46.16 billion last year. The company said that its AI Overviews tool used in its Google search results page has accumulated 1.5 billion monthly users from a billion in October.
Bank of America analyst Justin Post said that Wall Street is underestimating the upside potential and “monetization ramp” from this tool and cloud demand fueled by AI.
“The strong 1Q search performance, along with constructive comments on Gemini [large language model] performance and [AI Overviews] adoption could help alleviate some investor concerns on AI competition,” Post wrote in a note.
WATCH: Gemini delivering well for Google, says Check Capital’s Chris Ballard
CNBC’s Jennifer Elias contributed to this report.
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