Uber and
SoftBank announced a deal on Thursday allowing the Japanese tech titan to take
a large stake in the US ridesharing giant, making a hefty cut in the valuation
of the biggest venture-backed startup.
SoftBank will acquire 15 per cent of Uber's equity at a discount
of 30 per cent from its most recent value, according to a source familiar with
the terms of the deal.
The new investment, which will be finalised in January, is part
of an effort by Uber to move past a series of scandals and missteps and reform
its board structure as it gears up for a 2019 public share offering.
A source familiar with the deal said SoftBank had reached
agreements with investors to achieve its target of a 15 per cent share.
The two firms did not provide details of the valuation but the
source said the investment was based on Uber's worth of $48 billion, down from
$71 billion earlier this year.
"We look forward to working with the purchasers to close
the overall transaction, which we expect to support our technology investments,
fuel our growth, and strengthen our corporate governance," Uber said in an
emailed statement.
A separate statement from Rajeev Misra, chief executive of
SoftBank Investment Advisers, said, "We are appreciative of the support
from Uber's shareholders in the successful tender offer and look forward to
closing the overall investment in January."
"We have tremendous confidence in Uber's leadership and
employees and are excited to support Uber as it continues to reinvent how
people and goods are transported around the world," he added.
The source said SoftBank's total investment in Uber will amount
to $7.7 billion including a $1 billion infusion announced earlier this year.
The earlier investment was made at the higher valuation and the share
repurchases at a lower value, leaving a "blended" valuation for Uber
at $54 billion, according to the source.
The investment is part of the effort by SoftBank to become a
major player in the global tech world with a massive $100 billion fund, much of
it targeted for Silicon Valley startups.
At Uber, new chief executive Dara Khosrowshahi has vowed to fix
the company's work culture and business practices, after taking over earlier
this year from ousted founder Travis Kalanick.
Even as Uber has seen unprecedented growth by expanding to
dozens of countries, it has been hurt by missteps including allegations of
executive misconduct, a toxic work atmosphere and potentially unethical
competitive practices.
The SoftBank deal is expected to put an end to litigation among
stakeholders and clear the way for new board members, further loosening
Kalanick's grip.
Uber however still faces numerous challenges including rulings
from regulators that it unfairly competes with taxi operators, with London
authorities having pulled its license.
Uber is also seeking to become a major player in autonomous
cars, and has agreed to buy and adapt vehicles from Volvo to begin operating
self-driving taxis. But it faces a trail from former Google car unit Waymo
alleging Uber executives stole trade secrets.
The ridesharing group's website says it has operations in 616
cities in 77 countries and some 16,000 employees. In most cases Uber drivers
are treated as independent contractors.
