SoftBank buys large stake in Uber

29 December, 2017, 02:21 | Author: Luis Fowler
  • Uber-CEO-Travis-Kalanick

Assuming the deal goes through, SoftBank has agreed to buy another $1 billion worth of Uber shares at the company's previous $69 billion valuation. That is a roughly 30% discount to its most recent valuation of almost $70 billion.

SoftBank itself will keep a 15 percent stake, while the rest of the consortium will own approximately 3 percent, according to a second person familiar with the matter. The deal will trigger a number of changes in the way the board oversees the company, which is facing with federal criminal investigations, a high-stakes lawsuit and complaints about its workplace culture.

While SoftBank played hardball with Uber, it promised investors it would cover the price difference for them if the final sale price came in over $33 a share, according to a clause in the documents detailing the terms of the agreement.

SoftBank said it planned to close the deal next month.

SoftBank's purchase marks CEO Dara Khosrowshahi's first major deal since taking the reins of the embattled company from Travis Kalanick after a year of repeated public relations debacles and unforced errors. It will also put in motion a slate of governance reforms that were dependent on the deal going through, which will expand the board to 17 and revoke outsize voting power given to early backers.

"We look forward to working with the purchasers to close the overall transaction, which we expect to support our technology investments, fuel our growth, and strengthen our corporate governance", said in Uber spokesperson in a statement.

Bill Gurley
Benchmark Capital general partner and former Uber board member Bill Gurley Reuters

"The stockholders did the smart thing". The Journal reported at least 20 percent of Uber's shares had been tendered.

The vast majority of that investment comes from SoftBank buying up shares held by existing Uber shareholders, including employees and earlier investors.

An afternoon recap of the day's most important business news, delivered weekdays. Misra said SoftBank had "tremendous confidence in Uber's leadership and employees".

Some initial investors in the consortium, including General Atlantic, dropped out over disagreement about the price offered to shareholders, Reuters previously reported.

SoftBank has previously pumped billions into several ride-hailing companies overseas, including Didi in China, Grab in Southeast Asia and 99 in Brazil. Didi last week raised $4 billion, including some investment from SoftBank.

Uber now has a powerful strategic partner in SoftBank, the Japanese telecom giant that is investing hundreds of billions of dollars in technology.

More news: Why Apple's Board Is Requiring CEO Tim Cook to Only Fly Private

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