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SoftBank buys large stake in Uber

29 December 17 - RE+D Magazine
SoftBank buys large stake in Uber

COMPANIES

PEOPLE

Uber and SoftBank came to a long-awaited tender agreement on Thursday, according to The Wall Street Journal, uniting one of the world's most ambitious tech investing funds with one of the most valuable start-ups.

 
The deal values Uber at $48 billion, according to the Journal. That's about a 30 percent discount to the company's $68 billion valuation from June 2016. According to the Journal, SoftBank will likely acquire 15 percent of the company, with an additional 5 percent of the company likely available to other outside bidders. SoftBank and Uber were not immediately available to comment on the report.

Uber is being forced to accept a reduced price following a tumultuous year that's seen its co-founder Travis Kalanick ousted from the CEO role, a scathing report on the company's approach toward sexual harassment, a data breach and a host of lawsuits that threaten to derail Uber's growth plans.

Uber, which has said that it's eyeing a 2019 IPO even as it loses billions of dollars a quarter, needs SoftBank's capital to continue fueling its expansion. The company has to date counted on venture capitalists and other private market investors, and is now turning to SoftBank to keep the money flowing.

But the SoftBank cash is also structured to provide liquidity to early employees and investors, who have millions — if not billions — of dollars locked up in Uber stock. Without an IPO on the immediate horizon, a secondary offering is a way to relieve some of that pressure.

Few Silicon Valley investments in recent history have been so thoroughly scrutinized. SoftBank's presence is expected to temper Uber's board, which has been in the throes of legal disputes and in-fighting.

The deal also adds to SoftBank's growing ride-hailing portfolio. SoftBank is an investor Didi Chuxing, the majority owner of Uber's China operations, and has also backed Grab, a ride-hailing company in Southeast Asia, as well as India's Ola.

There are other connections between Softbank and Uber. Dara Khosrowshahi, who replaced Kalanick as Uber's CEO, is a board member of SoftBank-backed Fanatics. Since being named to the top spot in August, Khosrowshahi has taken steps to reform Uber. The company fired Chief Security Officer Joe Sullivan after revelations that Uber had concealed a 2016 data breach, and Khosrowshahi has met with global officials to help improve the company's reputation in cities like London.

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