Uber finally signs $10B investment agreement with Japan’s SoftBank
After weeks of back-and-forth dealmaking, Uber Technologies Inc. and SoftBank Group Corp. have come to an agreement that will see the Japanese telecommunications giant invest $10 billion in the embattled ride-hailing company.
The investment will include $1 billion in new shares and $9 billion from acquiring equity from existing shareholders. Employees will be able to sell up to half their Uber shares, according to Recode.
The deal, which also includes money from Dragoneer Investment Group LLC, was first reported in September. Uber said in a statement that the investment is a “strong vote of confidence” in its long-term potential and one that will help fuel its investments in technology and global expansion, while also “strengthening” its corporate governance.
The last claim about corporate governance is by far the most notable of the reasons behind the deal. SoftBank’s money comes with a commitment from Benchmark Capital LLC, Uber’s recalcitrant venture capital investor, to withdraw its legal action against Uber founder and former Chief Executive Officer Travis Kalanick on claims of “fraud and breach of contract and fiduciary duty.” Kalanick also has agreed to give Uber’s board majority approval over board seats he controls if he ever needs to fill them again, according to sources cited by Bloomberg.
It’s not clear from reports whether SoftBank will be acquiring some or all of Benchmark’s shares in the company. But given the fact that Benchmark has gone from all guns blazing against Uber to its current position, the logical conclusion is that Benchmark will have profited from the deal in some shape or form.
The Benchmark aspect aside, the SoftBank deal itself may still face a number of hurdles. The $1 billion straight investment in new stock in Uber is based on a $68 billion valuation for the company, but the remaining $9 billion offer to acquire shares from existing investors will be set at a lower valuation price to be determined by Softbank next month. According to Tech in Asia, if SoftBank fails to reach commitments to sell at least 14 percent of Uber stock, it can walk away from the deal.
If that happens, SoftBank will likely invest its money in Uber competitor Lyft Inc. instead, something already raised by SoftBank CEO Masayoshi Son in August. SoftBank has also previously invested in international Uber rivals, including Southeast Asia’s GrabTaxi Holdings Pte Ltd. and India’s ANI Technologies Pvt. Ltd.
Photo: automobileitalia/Flickr
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