Uber-SoftBank Deal Is Said to Near Approval, Signing Imminent
Uber-SoftBank Deal is said to be close to approval with signing.
(Bloomberg) -- A multibillion-dollar deal that will see SoftBank Group Corp. take a big stake in Uber Technologies Inc. is close to being approved by the main players, people familiar with the matter said.
The transaction may be worth up to $10 billion and includes Uber governance reforms. The terms have been negotiated for weeks and are expected to be signed on Sunday, the people said. They asked not to be identified talking about private deliberations.
Uber’s board was briefed on the terms of the deal Saturday and lawyers have been working to complete the language of the agreement, the people said. Signatures were being collected on Sunday, the people said. Uber declined to comment.
As part of the agreement, venture capital firm Benchmark will put its lawsuit against Uber co-founder Travis Kalanick on hold and will agree to drop the fraud complaint when SoftBank’s investment and the governance reforms kick in, the people said. Kalanick is agreeing to give Uber’s board majority approval over the three board seats he controls should he ever need to fill them again, the people said.
The imminent deal is major hurdle for Uber as it tries to overcome a series of scandals, leadership turmoil and executive departures. If the transaction goes through, the San Francisco-based startup will gain a well-connected Japanese investor in SoftBank. It could help Uber strike deals with competitors in India or Southeast Asia. SoftBank is a major investor in Ola and Grab, Uber’s rivals in those regions.
Uber’s board already approved a slate of governance reforms that restrict Kalanick’s role at the ride-hailing company, including equalizing the voting power of different share classes and increasing the size of the board to 17 to allow for new independent directors. Those changes are contingent on the SoftBank deal going through.
Uber had been negotiating with SoftBank for weeks about the process by which it would buy Uber shares. Ultimately, SoftBank agreed to buy shares at a single price as long as sellers were barred from colluding to push up the price. Then Kalanick threw a wrench in the deal, insisting that Benchmark put a hold on its lawsuit against him before he would approve it. Finally, this week, Benchmark relented after Uber’s new Chief Executive Officer Dara Khosrowshahi and other board members urged the firm to do so, two of the people said.
SoftBank, along with Dragoneer Investment Group and General Atlantic, are expected to invest at least $1 billion in Uber and purchase up to $9 billion worth of Uber shares from existing investors. The initial price for the tender offer may not be set for more than a week, a person familiar with the matter said. SoftBank is expected to buy shares from Uber at the company’s current valuation of nearly $70 billion, but the price of the secondary stock sale -- where existing investors sell -- is expected to be lower.
Investors TPG, Tiger Global, DST Global and the Chinese company Tencent Holdings Ltd. may also buy Uber shares as part of the deal, the people said.
The transaction may make Kalanick a cash billionaire if he decides to sell a large enough chunk of his stake in the company. The deal could also be the largest private stock sale ever, and will create a host of new San Francisco millionaires as early employees sell shares.
Uber plans to run newspaper ads informing investors about the share purchase. Then SoftBank will propose a price at which it will buy stock. Uber shareholders will then have to decide if they want to sell and how many shares they want to offer. If SoftBank doesn’t get enough sellers, it could propose a higher price or walk away.
To contact the reporter on this story: Eric Newcomer in San Francisco at enewcomer@bloomberg.net.
To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Alistair Barr
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