SoftBank ditches stake in dog walking start-up Wag
Japanese company sells back nearly 50% stake to company
SoftBank Group agreed to sell its nearly 50 per cent stake in Wag back to the dog walking company, ending a disappointing investment for the Japanese company’s $97bn Vision Fund.
Wag told employees today it was “amicably parting ways” with SoftBank and that the investor would no longer hold a seat on the company’s board. It also said it would be eliminating job positions in order to “align our organisation with the needs of our business”.
SoftBank will lose money on the stake sale, which is expected to close this month, one person familiar with the deal said. The Japanese group previously pledged $300m in January last year, valuing the company at $650m
“As a more focused company with a solid capital base that is right-sized to the needs of our business and strategy, we have plenty of runway to execute our plans to accelerate our progress toward profitable growth,” Wag wrote in an internal memo, which was seen by the Financial Times.
“The decision to move in this direction was based on the strong conviction of our investors that this is the right course for the company.”
Wag is the latest disappointment for SoftBank following the failed initial public offering this year of one of its most high-profile investments, property company WeWork.
Wag’s buyback comes after the company last month announced chief executive Hilary Schneider would exit and be replaced by Garrett Smallwood.
The sale also followed discussions with potential acquirers for Wag’s business. SoftBank had pushed the company to cut costs further and consider a number of strategic alternatives, including liquidation, one person familiar with the talks said.
The Wall Street Journal first reported on the sale and Wag’s job cuts.