Consortium led by SoftBank to buy large stake in Uber

SoftBank itself will keep a 15 per cent stake, while the rest of the consortium will own about 3 per cent, a person familiar with the matter said.
SoftBank itself will keep a 15 per cent stake, while the rest of the consortium will own about 3 per cent, a person familiar with the matter said.PHOTO: BLOOMBERG

SOMERVILLE • A consortium led by SoftBank Group Corp will buy a large number of shares of Uber Technologies in a deal that values the ride-services firm at US$48 billion (S$64 billion), in a victory for new chief executive Dara Khosrowshahi.

The price is a roughly 30 per cent discount to Uber's most recent valuation of US$68 billion.

The deal will trigger a number of changes in the way the board oversees the company, which is dealing with federal criminal probes, a high-stakes lawsuit and an overhaul of its workplace culture.

SoftBank and the rest of the consortium, which includes Dragoneer Investment Group, will own approximately 17.5 per cent of Uber, a person familiar with the matter said.

That stake includes a share purchase, through a tender offer, from earlier investors and employees at the US$48 billion valuation, as well as a US$1.25 billion investment of fresh funding at the US$68 billion level.

Uber said the deal will close early next year. On Thursday, it said existing investors had agreed to sell enough shares for SoftBank to go through with the transaction.

SoftBank itself will keep a 15 per cent stake, while the rest of the consortium will own about 3 per cent, according to a second person familiar with the matter.

Private equity group TPG was part of the consortium of buyers, a source familiar with the matter said.

Mr Khosrowshahi, who took the top job in August after Mr Travis Kalanick was forced to step down in June, helped negotiate the deal.

Uber is losing more than US$1 billion each quarter, and a new cash infusion is critical. The company is also planning an initial public offering in 2019.

When the deal is completed, the company will make governance changes - expanding Uber's board from 11 to 17 members, including four independent directors, limiting some early shareholders'voting power and cutting the control wielded by Mr Kalanick, who remains on the board and is still one of the largest stakeholders.

Mr Rajeev Misra, chief executive of SoftBank's Vision Fund, a US$98 billion tech investment vehicle, will join the Uber board, The Wall Street Journal reported.SoftBank will get two seats on the expanded board, a source told Reuters.

Mr Misra said in a statement that SoftBank has "tremendous confidence in Uber's leadership and employees". Uber board members agreed in early November to governance changes to pave the way for the SoftBank deal.

SoftBank founder Masayoshi Son has taken a keen interest in ride-hailing companies around the world, and already has sizeable stakes in China's Didi, Brazil-based 99, India's Ola and Singapore-based Grab, all of which have competed with Uber.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 30, 2017, with the headline 'Consortium led by SoftBank to buy large stake in Uber'. Print Edition | Subscribe