SoftBank seals deal to make $1 billion investment in Uber and buy shares from investors


Japanese technology conglomerate SoftBank has reached a deal with Uber to invest billions in the ride-hailing giant.

Uber Technologies Inc. confirmed the investment in a statement Sunday without giving details.

But a person briefed on the deal told The Associated Press that SoftBank Group will buy about $1 billion worth of new Uber stock, then will offer to purchase shares from investors and Uber employees with the goal of reaching a 14 percent stake in the company. Uber currently is valued at $68.5 billion, but stock offers will be based on a lower valuation, so it’s unknown just how much the total multibillion-dollar deal will be worth, said the person, who spoke on condition of anonymity because details were not released.

Uber’s statement said it reached an agreement with a consortium led by SoftBank and Dragoneer Investment Group. The deal is a vote of confidence in the company’s potential and “will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance,” the statement said.

The move also clears the way for Uber, among the most valuable tech firms in the world, to sell stock to the public. Under the deal, the initial public offering will take place before the end of 2019.

The long-awaited deal was made public in October but was delayed by a corporate governance and legal dispute between investor Benchmark Capital and ousted CEO Travis Kalanick. Both sides ended their feud on Sunday, clearing the way for the SoftBank investment, the person said.

Kalanick, who controls 3 of 11 seats on the Uber board, agreed to allow a majority of board members to vote on any future appointments he makes, according to the person. Benchmark agreed to suspend a lawsuit against Kalanick and drop it once Softbank gets through a one-month tender offer period that will start in about two weeks. Benchmark, a major Silicon Valley venture capital firm that was among Uber’s early backers, alleged in the lawsuit that Kalanick covered up turmoil and legal threats at Uber.

The deal allows early investors such as Benchmark to sell at least some of their shares at a handsome profit. But there will likely be some wrangling over how much shares are worth in the coming weeks.

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 it was threatened by conflict between Kalanick and 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 have now 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, the Wall Street Journal reported, citing anonymous sources.

The deal would be positive for Uber, which is looking to turn a new page in the wake of recent repeated scandals, among them workplace sexual harassment allegations.

Meanwhile, SoftBank has been diversifying through investment for several years, and has ventured into sectors outside its core mobile technology business — completing deals with the likes of French robotics firm Aldebaran and e-commerce with Chinese giant Alibaba.

It is sending tremors through the tech world with a its massive new Vision Fund — a venture capital fund with $100 billion coffers intended for start-ups and expected to dominate the industry so thoroughly it’s playfully referred to as a “gorilla.”

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