Uber agrees investment deal with SoftBank

Uber co-founder Travis Kalanick gestures as he speaks at an event in New Delhi on December 16, 2016Image copyright

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Uber co-founder Travis Kalanick in New Delhi on December 16, 2016

A group of investors led by SoftBank is taking a large stake in Uber in a deal that will leave the ride-hailing firm’s co-founder an official billionaire.

Uber said it has closed the deal with the consortium, which is purchasing $1.25bn in new shares and a large number from existing shareholders.

Uber co-founder Travis Kalanick, who stepped down as chief executive in June, is reportedly one of the sellers.

The consortium will have a 17.5% stake in the company.

The transaction is valued at more than $8bn. As part of the deal, Uber’s board has expanded from 11 to 17 directors, with Softbank’s investor group taking two of the new seats.

The shake-up comes as Uber concludes a difficult year, in which it faced a sexual harassment scandal, investigations by regulators and a lawsuit over allegedly stolen technology.

It also continues to experience steep losses.

In a statement on Thursday, Uber called the deal a “great outcome for our shareholders, employees and customers, strengthening Uber’s governance as we double down on our technology investments and continue to bring our services to more people in more places around the world”.

The consortium includes Dragoneer Investment Group and SoftBank, a Japanese conglomerate that has been making a series of increasingly high-profile technology investments.

The transaction will leave SoftBank with about 15% of Uber, expanding its transportation holdings.

The firm has also backed China’s Didi Chuxing and Southeast Asian taxi-hailing app Grab, among other companies.

Details of the investment

The investment, which was months in the making, has two parts.

The consortium is buying $1.25bn in new shares in a deal that values Uber at about $70bn.

Existing Uber shareholders were also offered about $33 per share in a deal that valued Uber at about $48bn.

That price marks a discount to Uber’s most recent fundraising round, but for some of the firm’s early investors could provide a big payoff.

Mr Kalanick, who had owned about 10% of Uber, is reported to be selling 29% of his shares, cashing in on about $1.4bn. While he had long been worth billions, the deal cements his status as a billionaire.

Analysis – Dave Lee, BBC North America technology reporter

If you believe in karma, look away now.

Uber’s chief executive Travis Kalanick is a man who presided over a rampant culture of sexism, the covering up of a major hack, spying on journalists and, allegedly, the theft of trade secrets from Google. To name but a few.

And by close-of-play on Thursday, he’ll officially be a billionaire (he was only one on paper before).

On the other hand, the finalising of this massive deal will see Mr Kalanick’s powers reduced. He’s selling 29% of his shares, and Softbank, the Tokyo-based group which seems to be taking a stake in every bright idea in Silicon Valley, will gain two seats on Uber’s board.

The cash injection, of $1.25bn, will offer both a boost and a cushion as Uber looks to continue its loss-heavy strategy to grow in just about every city and major town in the world.

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