Uber pioneered the business of ridesharing and reports show that it is set to consolidate this market position with a mouthwatering $10 billion investment from Softbank of Japan.
Before the investment can be finalised, Softbank requested organisational and governance changes which Uber has now implemented.
As part of the changes, Uber’s directors agreed to take the company public in 2019 and limit the power of its founder Travis Kalanick.
The deal is provisional on SoftBank finalising its investment but would include expanding the 11 board seats to as many as 17 people. That will include three independent directors voted on by the board, including a chairperson, and up to three seats for SoftBank, depending on the size of the investment.
The proposal approved has a “one share, one vote” provision that would strip Uber’s earliest backers of some of their voting power, including Kalanick, Uber’s founder, and its largest investor, Benchmark.
Uber’s board said in a statement: “The Board voted unanimously to move forward with the proposed investment by SoftBank and with governance changes that would strengthen its independence and ensure equality among all shareholders. SoftBank’s interest is an incredible vote of confidence in Uber’s business and long-term potential, and we look forward to finalizing the investment in the coming weeks.”
Kalanick said in a separate statement: “Today the Board came together collaboratively and took a major step forward in Uber’s journey to becoming a world-class public company. We approved moving forward with the Softbank transaction and reached unanimous agreement on a new governance framework that will serve Uber well. Under Dara’s leadership and with strong guidance from the Board, we should expect great things ahead for Uber.”
According to reports, the deal would happen in two parts. First, a consortium co-led by the SoftBank Vision Fund and Dragoneer, an investment firm, would invest between $1bn and $1.25bn in Uber at the company’s present $70 billion valuation. Then the group would spend up to $10 billion to buy shares from existing investors at a valuation of about $50 billion.
However, the deal may be called off if not enough shareholders choose to sell their shares. As such, a tender process to find enough shareholders willing to sell shares will be done. Softbank wants to buy 14 percent of the company and as much as 17 percent. SoftBank, Uber and Dragoneer will soon sign a formal agreement to seal the deal.
If this deal pulls through, it will be very difficult for other ridesharing companies like Lyft and Taxify to catch up unless they can get a huge investment.
