Date
19 November 2017
Uber's board members are reported to have agreed to a deal that will pave way for a Softbank-led consortium to take a significant stake in the company. Photo: Bloomberg
Uber's board members are reported to have agreed to a deal that will pave way for a Softbank-led consortium to take a significant stake in the company. Photo: Bloomberg

Uber board strikes deal to clear path for SoftBank investment

Uber Technologies’ board members have struck a deal that will clear the path for a Softbank Group-led consortium to undertake a multibillion-dollar investment in the ride hailing services company, Reuters reports.

The agreement will also resolve a legal battle between Uber’s former chief executive, Travis Kalanick, and venture capital firm Benchmark, the report said.

Benchmark, an early investor with a board seat in Uber, and Kalanick have agreed over terms of the SoftBank investment, which, according to Reuters sources, could be worth up to US$10 billion.

The Uber board first agreed more than a month ago to bring in SoftBank as an investor and board member, but negotiations have been slowed by ongoing fighting between Benchmark and Kalanick.

The agreement struck on Sunday removes the final obstacle to launching the tender offer.

Japan’s SoftBank, a heavyweight in Silicon Valley tech investing, is leading a consortium of investors that plans to invest US$1 billion to US$1.25 billion in Uber, and in addition, will buy up to 17 percent of existing shares from investors and employees in a secondary transaction.

The terms were expected to be signed on Sunday, although the tender offer would likely take weeks to complete.

Uber is valued at US$68 billion, the most highly valued venture-backed company in the world. SoftBank’s investment through 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, according to the report.

Completing the SoftBank deal would allow Uber to open a new chapter after a year of controversy, including the resignation of Kalanick, the ouster of several top executives, sexual harassment and discrimination allegations, and multiple federal criminal probes, the report noted.

The deal is also tied to new governance rules that aim to more equally distribute power and bring more oversight to the company.

It would also be a major victory for Uber’s new CEO Dara Khosrowshahi, who often served as a mediator to help broker the agreement. 

To allow the deal to go forward, Benchmark has agreed to immediately suspend its lawsuit against Kalanick, which it filed in August in an effort to diminish the ex-CEO’s power at the company and force him off the board, a source told Reuters.

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RC

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