Peace Deal: Uber Board Paves the Way for Softbank Investment
Uber's board on Sunday agreed to a deal opening the way for a consortium of investors led by Japanese conglomerate SoftBank to buy a significant stake in the ride-hailing giant, ushering Uber toward becoming a public company, according to press reports.
The Softbank-led consortium's investment in Uber could be worth up to $10 billion, Reuters reported, citing two unnamed people familiar with the matter.
Under the agreement, SoftBank and its investors will buy at least 14 percent of Uber through a mix of newly created and existing stocks, according to reports from the Wall Street Journal and New York Times.
"We've entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment," an Uber spokesperson wrote in an emailed statement Sunday to this news organization. "We believe this agreement is a strong vote of confidence in Uber's long-term potential. Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance."
The deal comes after Uber CEO Dara Khosrowshahi [pictured above] said Thursday at a conference that the ride-hailing company will go public in 2019.
In the deal reached on Sunday, the reports said SoftBank will buy $1 billion in new stock valued at Uber's current valuation of $68.5 billion, but the Softbank consortium will build the majority of its stake in Uber by purchasing current Uber shares from investors to reach the 14 percent mark.
The purchase of existing shares will be conducted through a tender-offer process, which could take at least a month to finalize. During that process, a price will be set for the stocks to be sold, the New York Times reported.
SoftBank did not immediately respond to a request for comment. Benchmark, an early Uber investor that has a seat on the board, could not be reached for comment.
SoftBank's agreement will also act as a peace deal among opposing sides on Uber's board, which includes founder Travis Kalanick, who resigned in June after months of scandals and controversy within the San Francisco-based company.
As part of the deal, Benchmark will suspend a lawsuit against Kalanick, and drop it once the tender offer is completed. In return, Kalanick will allow board directors to vote on his selected board appointees in the future, according to the Wall Street Journal. Kalanick has control over two seats beyond his own.
SoftBank, which owns shares in other ride-hailing companies outside the United States, will receive two seats on Uber's board once the offer is complete, according to the New York Times.
In October, Uber's board made sweeping reforms within the company proposed by new Uber CEO Khosrowshahi and Goldman Sachs, which set the SoftBank deal and the 2019 IPO plans in motion. It also reduced Kalanick's and Benchmark's influence on the board by removing special voting powers in two categories of stock held disproportionately by Kalanick.
© 2017 San Jose Mercury News under contract with NewsEdge/Acquire Media. All rights reserved.
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