Softbank buys large stake in Uber
Japanese conglomerate Softbank and its group of investors bought a large stake in Uber that values the ride hailing startup at $48 billion, according to the Wall Street Journal and Reuters.
Uber investors and employees tendered shares equal to 20 percent of the company. Softbank will limit its stake to 15 percent, valuing Uber at a 30 percent discount of its most recent valuation of nearly $70 billion. The rest of the investor group will get a roughly 3 percent stake.
Softbank will invest $1 billion into Uber in hopes of ridding investor concerns the tender offer lowers the value of remaining shares, the Wall Street Journal reported.
As part of the deal, Uber's board will expand from 11 members to 17 members. SoftBank will appoint Vision Fund head Rajeev Misra to the board, along with others associated with the massive fund, according to the report.
New board appointees and an influx of cash come at rocky time for Uber. In 2017, cofounder and CEO Travis Kalanick resigned amid reports of a culture of sexism at the startup. It also got involved in a lawsuit with the Department of Justice and Alphabet over self-driving car intellectual property, and received criticism for data breaches and privacy.
According to Recode, the Softbank investment could bring stability to the board. It will see suspension of a lawsuit by investor Benchmark Capital Partners that alleged Uber's former CEO and co-founder Kalanick was trying to pack Uber's board with his allies and eventually return to his post as CEO. Benchmark claimed his doing so would harm Uber's shareholders, employees, drivers, and customers.
Uber said the deal will close early next year, according to Reuters. An Uber spokesperson said the deal was made "to support our technology investments, fuel our growth, and strengthen our corporate governance."