Published: Wed, November 15, 2017
Industry | By Dora Warner

SoftBank picks up majority stake in Uber

SoftBank picks up majority stake in Uber

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.

The group led by SoftBank and Dragoneer Investment Group is also planning to invest a much larger amount by buying up to $9 billion in Uber shares from employees and other shareholders, bringing its total ownership to at least 14% of the company. In this process, a price will be decided for existing Uber shares.

The agreement follows an October 3 Uber board meeting, in which directors voted to move forward with an investment from SoftBank.

The deal comes after Uber CEO Dara Khosrowshahi [pictured above] said Thursday at a conference that the ride-hailing company will go public in 2019.

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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. SoftBank is also expected to appoint two directors to the board and participate in management.

The SoftBank deal is critical for Uber because it will trigger significant governance reforms, which include moving to one vote per share and expanding the board size to 17.

Uber plans to run newspaper ads informing investors about the share purchase, and SoftBank will propose a price at which it will buy stock.

A spokeswoman for Benchmark did not immediately respond to a request for comment, and a spokesman for Kalanick declined to comment.

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Then Kalanick threw a wrench in the deal, insisting that Benchmark put a hold on its lawsuit against him before he would approve it.

SoftBank shares were down 0.75 percent on the news with Makoto Sengoku, market analyst at Tokai Tokyo Research Centre, saying that investors were underwhelmed with the news.

Since that meeting, SoftBank, Uber and Uber's early investors have haggled over deal terms.

Progress in the negotiations came after venture capital firm Benchmark, an early investor with a board seat in the ride-services company, and former Chief Executive Travis Kalanick struck a peace deal, reaching agreement over terms of the planned SoftBank investment.

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A deal would be positive for Uber, which is seeking to turn the page after recent repeated scandals, among them workplace sexual harassment allegations. The company has threatened to invest in ride-hailing rival Lyft if it does not get the Uber deal done.

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