Science

Uber board strikes agreement to pave way for SoftBank investment

Uber board strikes agreement to pave way for SoftBank investment

"If conditions on share price and a minimum of shares are not satisfactory for the SoftBank Group side, there is a possibility the SoftBank Group may not make an investment", SoftBank said in a statement.

Sunday's agreement also settled a legal battle between former Uber CEO Travis Kalanick and venture capital firm Benchmark, an early investor in Uber.

Uber argued that once in the bag, the investment would help fuel its development in the tech sector and its continued expansion at home and overseas, "while strengthening our corporate governance".

SoftBank is expected to buy up shares from some investors by pumping in as much as $9 billion, in a so-called tender offer to Uber stakeholders.

SoftBank is to buy the existing Uber shares in a process called a tender offer, which takes at least a month to complete. Those changes are contingent on the SoftBank investing in Uber.

The Benchmark-Kalanick lawsuit is almost dead, but this isn't a clear victory for Uber's ex-CEO.

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The deal is giving the world's most valuable startup an additional $1 billion in capital and could allow SoftBank to acquire as much as 14 per cent of Uber over time. The deal is also tied to new governance rules that aim to distribute power more equally and bring more oversight to the company.

Jack Gold, president of J. Gold Associates, said the deal with SoftBank suggests the Japanese firm "is now feeling much more comfortable that the board is asserting some control and that numerous bad publicity is behind Uber". The investment could be worth up to $10 billion, two people familiar with the matter have said.

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.

In turn, Kalanick must receive majority board approval should he want to replace the board seats over which he has control, according to the source.

Meanwhile, SoftBank has been diversifying through investment for several years, and has ventured into sectors outside its core mobile technology business - completing deals with the likes of French robotics firm Aldebaran and e-commerce with Chinese giant Alibaba (Berlin: AHLA.BE - news). Kalanick appointed them in September without first consulting with the board.

Uber plans to run newspaper ads informing investors about the share purchase, and SoftBank will propose a price at which it will buy stock. The company has threatened to invest in ride-hailing rival Lyft if it does not get the Uber deal done.


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