Uber and Softbank are reportedly close to striking a deal in which the Japanese conglomerate will buy a multibillion-dollar stake in the ride-hailing giant. What exactly is SoftBank, and what does this deal mean? Here’s a breakdown.
Uber and Softbank are reportedly close to striking a deal in which the Japanese conglomerate will buy a multibillion-dollar stake in the ride-hailing giant.
The deal could be worth as much as $10 billion, and key players are expected to sign it Sunday, according to Bloomberg, which said the terms include corporate governance reforms. News of the deal comes after Uber’s board, with an eye toward getting funding from SoftBank, voted to overhaul its corporate governance and create incentives for the company to have an initial public offering in 2019.
SoftBank plans to buy some newly issued shares as well as make a tender offer for existing shares, the New York Times reported. The bulk of the purchase, it said, would be through the tender offer.
First off, the deal would bring in money, which Uber could use to help fund expansion and its costly ride-hailing operations amid growing competition from U. S. rival Lyft.
But perhaps more important, it could help bring peace to a company defined in 2017 by scandal and infighting.
According to Bloomberg and the Wall Street Journal, the long-anticipated SoftBank investment could soon be finalized because of an accord between former chief executive Travis Kalanick and early Uber investor Benchmark.
Kalanick resigned as CEO in June after a string of controversies, including a lawsuit by Google self-driving-car spinoff Waymo alleging theft of trade secrets; a lawsuit by a woman in India who alleged Uber obtained her medical records after she was raped by one of the company’s drivers; and widespread allegations of sexual harassment at the firm.
Benchmark filed suit against Kalanick in August, alleging that the Uber co-founder committed an act of fraud when he persuaded the board in 2016 to give him appointment power over three new board seats without first informing them of scandals that would soon consume the company and lead to his forced resignation.
The two financial publications both reported Sunday that Benchmark had agreed to drop its lawsuit against Kalanick, clearing the way for the SoftBank deal.
Putting to rest the spat between Kalanick and Benchmark could help Uber’s new CEO, Dara Khosrowshahi, lead the company away from a period of tumult.
A third benefit is that Uber would get connected with SoftBank — a hugely influential Japanese corporation that has a lot of money it wants to put into tech firms.
SoftBank is a Japanese multinational corporation best known as a domestic telecom and internet service provider. But its founder and chief executive, Masayoshi Son, has also pushed it to aggressively invest in overseas companies across different categories. It bought Sprint in 2013 for $20 billion. It was an early investor in Yahoo and Alibaba. It put $4.4 billion into New York commercial real estate startup WeWork in August. And it has invested in ride-hailing companies across Asia such as Didi Chuxing, Grab and Ola.
