SoftBank Buys Uber Shares At A Discount

Japanese telecommunications firm Softbank Group announced it had acquired a large stake in ride-hailing company Uber Technologies on the cheap, with investors and employees tendering shares, the Wall Street Journal reported Thursday (Dec. 28).

Shares tendered as part of the deal were equal to 20 percent of Uber’s total value. Softbank is likely to keep its stake at 15 percent, giving Uber a $48 billion value which is approximately 30 percent lower than the company’s valuation of close to $70 billion. Others involved in backing Softbank’s investor group were likely to purchase the remaining shares from the tender offer. That offer expired Thursday (Dec. 28).

Uber paved the way to receive a multi-billion-dollar investment led by SoftBank Group in November, after co-founder and ex-CEO Travis Kalanick reached a deal with venture capital firm Benchmark over board seats. According to a WSJ news report at the time, the deal, which was confirmed by Uber, puts on hold a lawsuit Benchmark had lodged against Kalanick.

In exchange for putting the lawsuit on hold, Kalanick agreed to allow Uber directors to vote on his appointees to the board for the three seats he controls. Under the terms of the deal, six directors will be added to the board, and voting changes would be introduced that will limit Kalanick’s power over the board and give Uber much-needed stability.

“We believe this agreement is a strong vote of confidence in Uber’s long-term potential,” an Uber spokesman said in an emailed statement. “Upon closing [the deal], it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.”

Other investors in the SoftBank-led deal include Dragoneer Investment Group and Tencent Holdings. With a seat on the board, people familiar with the matter told the paper SoftBank plans to appoint Rajeev Misra, who runs the $93 billion Vision Fund.