Wework lays off 2,400 employees in Softbank-led efficiency drive

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SAN FRANCISCO, CALIFORNIA - OCTOBER 07: A pedestrian walks by a WeWork office on October 07, 2019 in San Francisco, California. Days after withdrawing its registration for an initial public offering, WeWork also warned employees that the company could be set to lay off nearly 2,000 people, about 16 percent of its workforce. (Photo by Justin Sullivan/Getty Images)
The German company, founded in 2012, operates content management systems behind websites like Electronic Arts (EA), Spotify Technology SA and WeWork.

Wework today confirmed it will lay off roughly 2,400 employees around the world as the company launches a drastic bid to cut costs and shore up its business.

A Wework spokesperson said the cuts were part of the company’s efforts to focus on its core business and “create a more efficient organisation”.

Read more: New York State attorney general reportedly investigating Wework

“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 firm added.

The cuts, first reported by CNBC, follow weeks of speculation about the extent of layoffs at the beleaguered flexible workspace provider.

They also mark the first significant move by Softbank after it seized control of Wework last month. The Japanese conglomerate is providing the firm a $9.5bn (£7.4bn) financial lifeline and will soon own roughly 80 per cent of its shares.

Wework has suffered a high-profile fall from grace since its $47bn valuation in January.

The company was forced to scrap plans for an initial public offering in September when investors baulked at its growing losses, business model and corporate governance, leading to the resignation of co-founder Adam Neumann as chief executive.

With a new owner two new chief executives in place, the New York-based firm is set to roll out wide-ranging reforms and refocus attention on its core business.

Read more: MUFG likely to deny Softbank loan over Wework bailout

However, Softbank’s funding plans were dealt a blow earlier today when it emerged Mitsubishi UFJ Financial Group (MUFG), Japan’s largest bank, was likely to withhold additional loans to help finance the Wework rescue package.

Softbank has asked for around ¥300bn (£2.1bn) in additional loans from Japan’s three megabanks – MUFG, Mizuho Financial Group and Sumitomo Mitsui Financial Group – in a bid to recoup losses from its large bets on Wework, The Financial Times reported.