SoftBank and other firms will invest up to $1 billion in Uber, picking up at least 14% in Uber through new and existing stock.

Uber board agrees to multi-billion dollar investment from SoftBank
Atom Fund Raising Monday, November 13, 2017 - 12:51

In what could be one of the largest private startups deals ever, ride-hailing firm Uber has approved Japanese conglomerate SoftBank Group’s offer to pick up a multibillion-dollar stake in the company.

According to a report in Bloomberg, SoftBank and other firms will invest up to $1 billion in Uber, picking up at least 14% in Uber through new and existing stock and proceed with a tender offer in coming weeks. This tender offer will be to buy up to 49 billion in form of shares from Uber’s existing investors.

SoftBank will get two Uber board seats as part of the investment.

As per a report in New York Times, this deal also paves the way for Uber to make governance changes and go public by 2019.

“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment. 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,” Uber said in a statement.

Investors such as TPG, Tiger Global, DST Global and Tencent Holdings may also invest in Uber as part of the deal.

However, the deal is still not sealed as it could still fall through if there aren’t enough interested investors ready to sell.

As part of the deal, one of Uber’s investors VC firms Benchmark has agreed to put a hold on its lawsuit against Uber’s co-founder and former CEO Travis Kalanick. It will then drop the complaint when the investment and governance reforms kick in, reports Bloomberg.

Uber has approved several changes that were crucial to SoftBank investing in the company. Some of them were the board approving governance reforms that restrict Travis’ role in Uber, increasing the size of the board to 17 to make space for two new independent directors and also making voting rights equal to all different share classes.

The finalization of the deal comes after several weeks of negotiations between the board and SoftBank. The Japanese major has reportedly agreed to buy shares at a single price if sellers were barred from working together to push up the price. While negotiations were on, Travis also put in a condition that Benchmark put the lawsuit on hold, something that the investor eventually gave in to.

SoftBank has invested in several of Uber’s rivals across the globe such as Didi Chuxing in China, Ola in India, Grab in Southeast Asia and 99 in Brazil. SoftBank is expected to help Uber build relationships with these rivals either to work alongside or strike deals. In 2016, Uber exited from China after it sold its operations to Didi and picked up a minority stake in the company. 

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