SoftBank agrees massive multibillion-dollar investment in Uber

13 Nov 2017

Uber on the map. Image: Ink Drop/Shutterstock

SoftBank agrees massive multibillion-dollar investment in Uber.

Uber has signed a preliminary agreement with SoftBank that will see the Japanese investment powerhouse take a multibillion-dollar stake in the taxi ride-sharing giant.

Under the terms of the deal, SoftBank and other companies, including Dragoneer, will invest up to $1bn in Uber and proceed with a tender offer in the coming weeks to buy up to $9bn in shares from existing investors.

“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. Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.”

The road ahead for Uber

The entire deal centres on Uber’s last-known public valuation of $70bn.

It also hinges on investors being willing to sell their shares. Those shares will be purchased at a lower valuation. If not enough investors are willing to sell their shares, the whole deal could fall through.

It will mean convincing the myriad of venture capitalists and former employees to give up their shares in return for cash. Investors include TPG, Tiger Global, DST Global and Chinese investor Tencent.

Another hurdle is that Uber’s biggest investor, Benchmark Capital, has a lawsuit against former CEO Travis Kalanick over the appointment of three board seats, including his own. In a so-called “peace deal”, Benchmark said it will drop the suit if the deal goes ahead.

The tender offer – slated to be the largest secondary transaction in history – is expected to launch on 28 November and will continue for 20 business days thereafter.

For former Uber employees, the Softbank deal could enable them to potentially turn their paper riches into millions in cash, unleashing another horde of wealthy technology types on San Francisco.

The deal comes at a crucial time for Uber, which wants to leave the past year of scandals and leadership turmoil firmly in the past and move on.

It has a new CEO Dara Khosrowshahi, who has a reputation for getting things done and a lot of road to cover to see its technology vision for transforming transport realised.

Uber on the map. Image: Ink Drop/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years