Softbank secures billion dollar investment in Uber
A group headed by Japanese conglomerate Softbank has sealed its proposed deal to buy existing shares in troubled ride hailing company Uber, but it results in a much reduced valuation of the company.
Worth about $9 billion, the stock acquisition was concluded at a near 30% discount, valuing Uber at about $48 billion, down from $68 billion.
Still, it’s a win for new chief executive Dara Khosrowshahi as the deal triggers a range of governance changes which it hopes will see any end to any more scandals.
Softbank is also investing $1.25 billion of fresh funding at the $68 billion valuation.
"The stockholders did the smart thing. The price is less important than locking in the governance changes and securing the support of the world’s most powerful technology investor," Erik Gordon of the University of Michigan’s Ross School of Business told Reuters.
Uber said the deal will close in January which will give Softbank and its partners a 17.5% stake in the firm.
Uber is currently losing about $4 billion a year and hopes to file an initial public offering in 2019.
Softbank has ‘tremendous confidence in Uber’s leadership and employees’ said Rajeev Misra, chief executive of SoftBank’s Vision Fund.
Misra will join the Uber board which will eventually expand from 11 to 17 members including four independent directors, as part of new corporate governance rules.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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