SoftBank: Uber investment under consideration but no final agreement reached yet
Nov 15 2017
Uber Technologies Inc., a USA ride-hailing giant, agreed Sunday on an investment by Japanese technology conglomerate SoftBank, which may make Uber to go public, local media reported.
The deal with SoftBank is aimed at getting past the clashes between Kalanick and early investors like Benchmark Capital, which has sued the former CEO. "Upon closing, it will help fuel our investments in technology and our continued expansion at home and overseas, while strengthening our corporate governance".
A day after Uber said that it has agreed to SoftBank's multibillion dollar investment, the Japanese conglomerate said that it was still only considering the investment and that there was no final agreement at this stage, according to a report in Reuters.
Essentially, this means that although Uber has agreed to move forward with SoftBank's proposal, the tender offer price is still under negotiation. Softbank will buy Uber shares using a process known as a tender offer that completes in a month. Those changes are contingent on the SoftBank investing in Uber.
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.
SoftBank and Dragoneer are leading a consortium that plans to invest $1 billion to $1.25 billion in Uber, the mostly highly valued venture-backed company in the world, along with a purchase of up to 17 percent of existing shares in a secondary transaction. The deal is also tied to new governance rules that aim to distribute power more equally and bring more oversight to the company. The newly-created position will help the company expand its focus on India.
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. If Uber is hesitant to sell and SoftBank does not get 14% of ownership, Softbank can cut off the deal. People from SoftBank did not immediately respond to requests for comment. Kalanick appointed them in September without first consulting with the board.
SoftBank may not invest if conditions on share price and a minimum of shares are not satisfactory for the SoftBank Group side.