A consortium led by Japanese tech conglomerate, SoftBank, will invest $7 billion in ride-hailing company, Uber, in exchange for a 15 percent stake.
After the tender offer expired on Thursday, Softbank reportedly acquired a 15 percent stake in Uber, while the consortium received approximately 3 percent. Besides Softbank, the consortium also includes investment firm, Dragoneer, and private equity group, TPG.
According to several sources familiar with the situation, most of the investment stemmed from Uber shareholders that sold their shares to Softbank. Those shares were bought at a discounted valuation of $48 billion.
The Japanese conglomerate also intends to invest $1.25 billion in new Uber assets at the $68 billion valuation. Uber has confirmed the completion of the tender offer this Thursday, with the transaction expected to close in January.
“We look forward to working with the purchasers…we expect to support our technology investments, fuel our growth, and strengthen our corporate governance,” Uber said in a statement.
Once the deal is settled, Uber will expand its board from 11 to 17 members, including four independent directors. As part of the restructuring, the ride-hailing start-up will also limit some early shareholders voting power, and cut any control wielded by Uber’s former CEO, Travis Kalanick. Kalanick was forced to step down in June and was replaced by Dara Khosrowshaki, who helped negotiate the deal.
Khosrowshaki wanted to cut ties with the former CEO mainly due to the feud between Benchmark, an early Uber investor, and himself. Benchmark sued Kalanick, accusing him of trying to fill the board with his allies and return as CEO.
The Softbank deal will push Kalanick to agree that he cannot fill the three board seats he controls in the future without a majority approval by the board. Benchmark agreed to postpone its lawsuit against the former CEO and will consider dropping the case if the SoftBank deal comes to fruition.
The company also will begin to sell stock to the public in 2019 and the latest cash infusion will only help the company to further reinvent itself. The ride-hailing start-up has faced a tough year being attacked by a series of lawsuits, criminal probes, and hacks.
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