Uber Technologies Inc. confirmed that Softbank Group Corp.’s multi-billionaire dollar investment has been approved and will also put Benchmark’s lawsuit on former Uber CEO, Travis Kalanick, on hold.
Under the agreement, this allows Softbank and other firms to invest up to $1 billion in Uber and other offers in the coming weeks to buy up to $9 billion in shares from current investors. But this does not necessarily mean the deal will go through because Uber shareholders were adamant on receiving a higher price than Softbank had previously offered.
Softbank and the other firms are expected to buy shares back from investors at Uber’s current valuation of approximately $70 billion. But the initial price for the offer may not be set for a few more weeks, according to sources.
Along with the deal, Benchmark will put the case against Kalanick on hold, and drop it entirely when the investment is in effect, according to the sources familiar with the matter. Kalanick will also need to receive Board approval to replace seats after he had appointed two board members without approval of other directors.
Uber first mentioned the deal with Softbank a month ago, after Arianna Huffington, Uber board member, said that a deal with Softbank was likely and that it would come within the week after her interview, but the deal was finalized nearly a month later.
“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment," Uber said in a statement. "We believe this agreement is a strong vote of confidence in Uber’s long-term potential.”
Other investors may include TPG, Tiger Global, DST Global and Tencent Holdings Ltd. may also join and buy Uber’s shares, according to sources.
Uber plans to run newspaper ads informing investors about the share purchase, and then SoftBank will propose a price at which it will buy the stock. The deal remains in Uber investors’ decisions whether they would like to sell or hold their shares. If Softbank does not receive enough buyers, it could turn away or offer a higher price.
Masayoshi Son, CEO of Softbank, previously considered taking a stake in Lyft if the Uber investment had not gone through.
Uber has gone through a shaky year under the reigns of Kalanick. Uber is currently involved in multiple criminal probes for its violations and unethical business practices, but now investment by Softbank marks a huge recovery effort and turnaround for Uber.
Dara Khosrowshahi set a plan for the company to dig it out of the situation it was left after Kalanick stepped down from. The investment will lessen Kalanick’s power on the Board, which majority of the directors including investors wanted.
“Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.” stated Uber.