Softbank gets Uber A-OK for $9bn investment cash splurge
And ex-CEO Kalanick will be praying it goes through
Cash-flinging Japanese tech firm Softbank will sink up to ten billion dollars into Uber, following a vote of approval by the taxi app's board.
In addition to the direct purchase of $1bn Uber shares, Softbank also wants to buy out other investors' shares up to a total of $9bn, according to financial newswire Bloomberg.
Crucially, Softbank expects to buy up others' Uber shares at a lower price than it will pay for its direct investment. The possibility of the investment was previously reported in July.
"We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment," an Uber spokesman said in a canned statement. "We believe this agreement is a strong vote of confidence in Uber's long-term potential."
The Financial Times added that Softbank could walk away if other investors declined to sell the $9bn worth of shares, amounting to a 14 per cent stake in Uber, that the Japanese firm is seeking.
The deal may also help to get former Uber chief exec Travis Kalanick out of a hole. Uber investor Benchmark agreed to drop its fraud lawsuit against Kalanick if the Softbank deal goes through. Benchmark had alleged that Kalanick duped investors into allowing him to create three disputed board seats that it later wanted to delete, which action would dump Kalanick out of Uber altogether.
Benchmark agreed to drop the lawsuit in return for Kalanick's board power being diluted but its co-operation depends on the Softbank investment going through. Should current Uber investors decide that Softbank’s buyout offer isn't tempting enough for them to sell up, it would seem that Kalanick will be back on the hook.
Although Kalanick quit as Uber chief exec, he remains on the board, having previously created the seat he now occupies.
China’s Tencent is also reportedly interested in buying a stake in Uber. ®