The deal will reduce the influence of Travis Kalanick and also bring in several governance changes at Uber.
After several months of speculations and negotiations, Japanese investment giant SoftBank will finally be buying into Uber, the world’s most valuable startup. More than half a year since SoftBank founder Masayoshi Son explicitly stated that he was looking at a potential investment, the company has put in a massive $10 billion in Uber. It is an all-stock deal, and will usher in several governance changes at the taxi-hailing service, Bloomberg reported.
Under the agreement, a consortium of investors led by SoftBank will buy at least 14 percent of Uber. The investment would dilute the stake of Benchmark Capital, one of Uber’s key investors until now and one that is locked in a bitter court battle with it over allegations of mistrust involving former CEO Travis Kalanick. However, once the SoftBank deal goes through, Benchmark is likely to drop the lawsuit or put it on hold. Uber’s board has already approved a slew of governance reforms that will significantly reduce Kalanick’s role at the company. ALSO READ: SoftBank keen to invest in either Uber or Lyft before entering America: Reports
“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. It is believed that SoftBank which is deeply invested in the biggest startups in the world, and especially in taxi services, would help Uber ink deals with some of its rivals in Southeast Asia — a region it is yet to dominate. ALSO READ: Ola receives $1.1 billion in funding from SoftBank, Tencent and others
This is America’s largest private stock deal, and will make a cash billionaire out of Uber founder Kalanick if he decides to sell a large enough portion of his stake in the company. Several mid-level employees who hold Uber stock will also turn millionaires with this deal. As far as Uber’s valuation is concerned, it is likely to go up by a few billion dollars from the current $69 billion. Uber plans to run newspaper ads informing investors about the share purchase. SoftBank’s agreement also makes it clear that it will set Uber up for an IPO by 2019.