Uber board reaches agreement to sell stakes to SoftBank

6 years ago - Published in Finance, Technical Analysis

Uber Technologies approved SoftBank Group's offer to buy a multibillion-dollar stake in the ride-hailing company, setting the stage for one of the largest private startup deals ever and which would resolve a legal battle between former Chief Executive Travis Kalanick and a prominent shareholder.

The agreement lets SoftBank and other firms invest up to $1 billion in Uber and proceed with a tender offer in coming weeks to buy up to $9 billion in shares from existing investors. The deal could still fall through if there aren't enough interested sellers. The deal also includes Uber governance changes.

"We've entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment," a company statement said in a statement Sunday evening. "We believe this agreement is a strong vote of confidence in Uber's long-term potential," it added. "Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance." A spokeswoman for Benchmark did not immediately respond to a request for comment.

Venture capital firm Benchmark, an early investor with a board seat in the ride-services company, and Kalanick have reached an agreement over terms of the SoftBank investment, which could be worth up to $10 billion, according to two people familiar with the matter, Bloomberg reported.

Uber is valued at $68 billion, the most highly valued venture-backed company in the world. SoftBank’s roughly $1 billion investment of fresh funding is expected to be at the same valuation. The secondary transaction, or the purchases from employees and existing investors, would be at a lower valuation.

The Japanese group, founded by billionaire Masayoshi Son, expressed an interest several months ago in investing around $1 billion in Uber for a stake of at least 14 percent.
But the deal was threatened by conflict between Kalanick and US venture capital firm Benchmark. The latter filed a lawsuit against Kalanick, accusing him of fraud, breach of contract and of plotting to manipulate the board of directors to allow him to return as CEO following his resignation in June.
The two parties reportedly reached an agreement on control of board seats, which included Benchmark putting its lawsuit on hold while Kalanick will allow directors to vote on his future appointments to the three seats he oversees.