Troubled office company WeWork said it will sack 2,400 employees, nearly 20% of its workforce, as part of SoftBank Group Corp’s restructuring plans, according to reports.
The Japanese conglomerate, which made its first operating loss in a decade, had already anticipated layoffs following the US$9.5bn buyout announced last month.
SoftBank swung to a US$6.5bn operating loss against an equivalent profit in the same period last year, as it had to factor in a US$4.6bn write-down for the WeWork investment.
The former provided a lifeline to We Company, the parent organisation of WeWork, which was on the brink of collapse having burnt through cash to fuel expansion, pushing the board to pull an initial public offering scheduled for September.
Founder Adam Neumann was reportedly paid US$1.7bn to leave his post as chairman following the acquisition.
Adam Neumann could personally give every employee being laid off today $100,000 in severance and he would still have $750m left for himself.— Laurie Voss (@seldo) November 22, 2019
“As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organisation,” WeWork was quoted as saying by Reuters.
The severance rounds began overseas weeks ago and are now moving to the US.
“This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition,” the quote continued.