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WeWork in Talks With John Legere of T-Mobile for C.E.O. Job WeWork Talking With John Legere of T-Mobile About C.E.O. Job
(about 2 hours later)
WeWork, seeking a new chief executive to lead the co-working company’s overhaul, is in talks with John Legere of T-Mobile, according to two people briefed on the discussions.WeWork, seeking a new chief executive to lead the co-working company’s overhaul, is in talks with John Legere of T-Mobile, according to two people briefed on the discussions.
Mr. Legere, who has been credited with reviving T-Mobile since becoming its chief executive in 2012, is one of several candidates the company is considering, according to the people. WeWork last month received a bailout from SoftBank, the Japanese conglomerate that is WeWork’s largest outside shareholder. Mr. Legere, who has been credited with reviving T-Mobile since becoming its chief executive in 2012, is one of several candidates the company is considering, the people said.
WeWork was close to running out of money after rapidly expanding its network of office spaces. The company is expected to lay off thousands of employees and sell operations that aren’t part of its core business of subletting office space. 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 WeWork’s largest outside shareholder. The company is expected to lay off thousands of employees and sell operations that aren’t part of its core business of subletting office space.
Facing questions about the viability of its business model and its unusual corporate governance, the company called off its initial public offering in September. Also that month, WeWork’s co-founder Adam Neumann stepped down as chief executive, to be replaced by two executives, Sebastian Gunningham and Artie Minson.Facing questions about the viability of its business model and its unusual corporate governance, the company called off its initial public offering in September. Also that month, WeWork’s co-founder Adam Neumann stepped down as chief executive, to be replaced by two executives, Sebastian Gunningham and Artie Minson.
“This is further confirmation that SoftBank is not going to let this thing go up in flames,” said Vicki Bryan, chief executive of Bond Angle, a research firm.
Any new chief executive will face a tough task turning around WeWork, which posted a $1.4 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.Any new chief executive will face a tough task turning around WeWork, which posted a $1.4 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 like Verizon, AT&T and Sprint. His approach has paid off for T-Mobile, which has more than doubled its subscribers under Mr. Legere.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 like Verizon, AT&T and Sprint. His approach has paid off for T-Mobile, which has more than doubled its subscribers under Mr. Legere.
But Mr. Legere does have a connection to SoftBank: 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 Federal District Court in New York. But Mr. Legere does have a connection to SoftBank, which is led by the 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 Federal District Court in New York.
Sprint’s executive chairman, Marcelo Claure, recently became the executive chairman of WeWork as part of SoftBank’s bailout of the company.Sprint’s 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 difficult time separating T-Mobile’s negotiations with Sprint from his talks with WeWork, given that SoftBank effectively controls both of those companies.
“The number of connections between these companies makes the situation highly problematic,” said Craig Moffett, a co-founder of the research firm MoffettNathanson.
A representative for T-Mobile declined to comment.A representative for T-Mobile declined to comment.
Mr. Legere may believe it is time for a new challenge. The next phase for T-Mobile is unlikely to be as exciting as the one in which it became the insurgent that telecom giants were forced to reckon with. He has also earned a fortune at T-Mobile. Between 2016 and 2018, his compensation packages totaled more than $110 million, according to securities filings.
Given the right financial incentives, Mr. Legere might be drawn to the challenge of turning around a company that is likely to remain in the spotlight. While there is growing demand for WeWork’s product — office space that offers more flexible terms than traditional leases — it has plenty of rivals that are in a better financial shape.
SoftBank’s $1.5 billion equity investment last month took its total investment in WeWork to more than $10 billion. It is planning to spend an additional $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 $5 billion for WeWork in a debt financing that would take the form of bond sales and bank commitments.
Investors and lenders putting up that money would have to be convinced that WeWork’s financial problems had been addressed and that the company had a future.
Ms. Bryan, the bond analyst, said the move to bring in a new chief executive was designed in part to change perceptions of WeWork, which has become a poster child for financial excess and poor leadership.
“Let’s replace the management, get some splashy things we can announce, to show that the prospects for the company have improved,” she said.
The Wall Street Journal first reported the talks between WeWork and Mr. Legere.The Wall Street Journal first reported the talks between WeWork and Mr. Legere.
This is a developing story and will be updated. Edmund Lee contributed reporting.