SoftBank to buy chunk of Uber

Mae Love
November 13, 2017

Uber Technologies Inc., a US ride-hailing giant, agreed Sunday on an investment by Japanese technology conglomerate SoftBank, which may make Uber to go public, local media reported.

Uber Technologies Inc. and SoftBank Group Corp. have come to an agreement that will see the Japanese telco giant invest a whopping $10 billion in the ride-hailing company in the form of $1 billion in new shares and $9 billion in the form of acquiring equity from existing shareholders. SoftBank is expected to buy shares from Uber at the company's current valuation of almost $70 billion, but the price of the secondary stock sale - in which existing investors sell - is expected to be lower, the report noted.

Under the agreement, SoftBank will buy 1 billion dollars in new stocks valued at Uber's current valuation of 68.5 billion dollars, but the Softbank consortium will build the majority of its stake in the ride-service company by purchasing Uber's current shares from investors to reach the 14 percent mark.

The deal, that also includes money from Dragoneer Investment Group LLC., was first rumored in September and is claimed by Uber to be a "strong vote of confidence" in their long-term potential and one that will "help fuel" their investments in technology and global expansion, while also "strengthening" their corporate governance. "Upon closing, it will help fuel our investments in technology and our continued expansion at home and overseas, while strengthening our corporate governance".

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This means the SoftBank and Dragoneer consortium may end up owning around 14% of Uber.

The agreement follows an October 3 Uber board meeting, in which directors voted to move forward with an investment from SoftBank. As part of the deal, Uber's board agreed to major governance changes, including curbing the powers vested in former CEO Travis Kalanick, on account of his position on the company's board.

App-based cab aggregator Uber has closed a deal with Japanese multinational telecommunications corporate SoftBank, commissioning the sale of a significant portion of its sale to the latter, in a bid to implement modifications in management and go public in two years. The initial price for the tender offer may not be set for more than a week. The firm will also suspend the lawsuit that it filed against Kalanick, and drop the suit upon completion of the tender offer. But the SoftBank investment will let some of the company's investors sell their shares to lock in huge gains.

Katie Benner and Mike Isaac are New York Times writers.

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