Ride-hailing giant Uber Technologies Inc. has an initial agreement with Japanese technology firm SoftBank
Ride-hailing giant Uber Technologies Inc. has an initial agreement with Japanese technology firm SoftBank to invest billions into the company, a spokesman said Sunday.
The long-awaited investment was announced in October but was delayed by a corporate governance and legal dispute between investor Benchmark Capital and ousted Uber CEO Travis Kalanick. But both sides came to terms on Sunday, clearing the way for the investment.
“We believe this agreement is a strong vote of confidence in Uber’s long-term potential,” an Uber spokesman told USA TODAY. “Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.”
Kalanick, who controls three seats on the Uber board, agreed to allow a majority of board members to vote on any future appointments he makes, a source close to the deal told The Associated Press. Benchmark agreed to suspend a lawsuit against Kalanick and drop it once SoftBank gets through a tender offer period, AP reported. Benchmark, a major Silicon Valley venture capital firm that was among Uber’s early backers, alleged in the lawsuit that Kalanick covered up turmoil and legal threats at Uber.
“Kalanick’s overarching objective is to pack Uber’s Board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO — all to the detriment of Uber’s stockholders, employees, driver-partners and customers,” Benchmark lawyers alleged in their lawsuit filed in August.
Kalanick stepped down as CEO in June from the company he founded in 2009. A blog post written by former Uber engineer Susan Fowler started a wave of allegations claiming Uber has a toxic and sexist work culture.
SoftBank would buy $1 billion in new stock and purchase shares from investors and employees worth up to 14% of the ride-hailing company. At present Uber is valued at $68.5 billion. The agreement would last for a defined offer period, but the AP source didn’t know when it would end.
Under the deal, the dispute between Benchmark and Kalanick had to be worked out for it to go through.
The deal allows early investors such as Benchmark to sell at least some of their shares at a handsome profit, and also makes it possible for Uber to sell stock to the public, perhaps within the next 18 months.
Contributing: The Associated Press
