SAN FRANCISCO — Uber was close on Sunday to finalizing a deal to sell a significant stake of itself to SoftBank, a Japanese conglomerate, paving the way for the ride-hailing company to make sweeping governance modifications as well as to go public by 2019.
Under the agreement, a consortium of investors led by SoftBank will buy at least 14 percent of Uber through a combination of completely new as well as existing stock, according to three people briefed on the process, who spoke on condition of anonymity because those details are confidential. SoftBank plans to buy about $1 billion of fresh stock at Uber’s current valuation of about $68.5 billion, however the bulk of the deal will be purchasing existing Uber shares by current investors.
SoftBank will be to buy the existing Uber shares in a process called a tender offer, which takes at least a month to complete. During in which process, a cost will be set for the existing Uber shares. If investors are reluctant to sell as well as SoftBank cannot hit its threshold of 14 percent ownership of Uber, SoftBank can walk away by the deal, the people said.
An Uber spokesman declined to comment on Sunday. People by SoftBank did not immediately respond to requests for comment.
The agreement follows an Oct. 3 Uber board meeting, in which directors voted to move forward with an investment by SoftBank. As part of the deal, Uber’s board agreed to carry out a set of sweeping governance modifications, including measures in which reduce the influence in which Travis Kalanick, Uber’s former chief executive, has at the company. He still incorporates a seat on the company’s board. The SoftBank investment also sets up Uber to go public by 2019, another provision in which was contingent on the deal.
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Since in which meeting, SoftBank, Uber as well as Uber’s early investors have haggled over deal terms. Some of Uber’s early investors, like the venture capital firm Benchmark, initially wanted to retain certain shareholder rights in which they hold through their Uber stock, according to two of the people briefed on the discussions. Benchmark as well as others ultimately agreed to waive those rights in exchange for concessions by SoftBank over the tender offer process, the people said.
Benchmark has agreed not to work with different investors to prop up the cost during the tender offer. The firm will also suspend the lawsuit in which the item filed against Mr. Kalanick, as well as drop the suit upon completion of the tender offer.
SoftBank plans to purchase the Uber shares along with different investors, including Dragoneer, an investment firm. SoftBank will gain two Uber board seats as part of the investment.
Uber does not necessarily need completely new money, as the item has raised more than $10 billion in debt as well as equity as well as has some $5 billion within the bank. however the SoftBank investment will let some of the company’s investors sell their shares to lock in huge gains. Early employees also stand to sell for significant sums.
SoftBank also owns pieces of ride-hailing companies around the globe, including Didi Chuxing in China, Ola in India, Grab in Southeast Asia as well as 99 in Brazil. The firm, led by Masayoshi Son, could help Uber navigate its relationships with those global rivals. Uber left the China market in 2016 by selling its operation to Didi as well as taking a minority investment stake within the completely new company.
SoftBank’s investment in Uber pressures Uber’s main American rival, Lyft, to raise more money to compete on driver incentive deals as well as lower prices. As the two companies battle for market share, both have lost hundreds of millions of dollars a year.
Follow Katie Benner on Twitter @ktbenner as well as Mike Isaac @MikeIsaac