Thread: Uber Approves SoftBank’s Multi-Billion Dollar Investment Offer

Uber Approves SoftBank’s Multi-Billion Dollar Investment Offer

By Eric Newcomer
November 12, 2017, 11:24 AM PST Updated on November 12, 2017, 5:05 PM PST

• Uber, investors close in on sale of up to $10 billion in stock
• Benchmark agrees to put suit against Uber co-founder on hold

Uber Technologies Inc. approved SoftBank Group Corp.’s offer to buy a multibillion-dollar stake in the ride-hailing company, setting the stage for one of the largest private startup deals ever.

The agreement lets SoftBank and other firms invest up to $1 billion in Uber and proceed with a tender offer in coming weeks to buy up to $9 billion in shares from existing investors.

The deal could still fall through if there aren’t enough interested sellers. The deal also includes Uber governance changes.

“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment," Uber said in a statement. "We believe this agreement is a strong vote of confidence in Uber’s long-term potential. Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.”

The terms were negotiated for weeks, according to people familiar with the matter who asked not to be identified talking about private deliberations. Uber’s board was briefed on the terms Saturday and lawyers had been working to complete the language of the agreement, the people said.

As part of the deal, venture capital firm Benchmark agreed to put its lawsuit against Uber co-founder Travis Kalanick on hold and drop the complaint when SoftBank’s investment and the governance reforms kick in, the people said.

Kalanick is agreeing to give Uber’s board majority approval over the board seats he controls should he ever need to fill them again, the people said.

The pact gets Uber closer to clearing a major hurdle as it tries to overcome a series of scandals, leadership turmoil and executive departures. SoftBank, a well-connected Japanese technology company, could help Uber strike deals with competitors in India or Southeast Asia. SoftBank is a major investor in Ola and Grab, Uber’s rivals in those regions.

Uber’s board already approved a slate of governance reforms that restrict Kalanick’s role at the ride-hailing company, including equalizing the voting power of different share classes and increasing the size of the board to 17 to allow for new independent directors.

Those changes are contingent on the SoftBank investing in Uber.
After a long negotiation with Uber, SoftBank agreed to buy shares at a single price as long as sellers were barred from working together to push up the price.

Then Kalanick threw a wrench in the deal, insisting that Benchmark put a hold on its lawsuit against him before he would approve it. Finally, this week, Benchmark relented after Uber’s new Chief Executive Officer Dara Khosrowshahi and other board members urged the firm to do so, two of the people said.

SoftBank, along with Dragoneer Investment Group and General Atlantic, are expected to invest at least $1 billion in Uber and purchase up to $9 billion worth of Uber shares from existing investors.

The initial price for the tender offer may not be set for more than a week, a person familiar with the matter said. SoftBank is expected to buy shares from Uber at the company’s current valuation of nearly $70 billion, but the price of the secondary stock sale -- in which existing investors sell -- is expected to be lower.

Investors TPG, Tiger Global, DST Global and the Chinese company Tencent Holdings Ltd. may also buy Uber shares as part of the deal, the people said.

There’s still a lot of jockeying to be done before a tender offer goes through, and at least one existing Uber investor is already pushing for a rich valuation.

"There is value to fixing the governance problems, but that value should not be given to new outside investors through an undervalued tender offer," said Glen Kacher, president of Light Street Capital Management LLC, which owns stock from Uber’s Series E financing round.

The transaction may make Kalanick a cash billionaire if he decides to sell a large enough chunk of his stake in the company. The deal could also be the largest private stock sale ever, and will create a host of new San Francisco millionaires as early employees sell shares.

Uber plans to run newspaper ads informing investors about the share purchase. Then SoftBank will propose a price at which it will buy stock. Uber shareholders will then have to decide if they want to sell and how many shares they want to offer. If SoftBank doesn’t get enough buyers, it could propose a higher price or walk away.

https://www.bloomberg.com/news/artic...gning-imminent

Trump says SoftBank will invest $50 billion in the US, aiming to create 50,000 jobs


Softbank = China

Softbank is a Japanese company best known for owning Yahoo Japan and Sprint.

With their background in telecommunications and the internet, why would they want to buy a major semiconductor company? And why, with $89B in debt, is Softbank adding another $31B?

The answer: Softbank is not what they appear. What isn't as well known is that Softbank is actually a major player in China's internet economy.

For starters, they bankrolled Alibaba. They control 32% of Alibaba, and through Alibaba, they dominate the Chinese internet economy because Alibaba has invested in the top internet companies in China: Weibo, for example.

Although based in Japan, Softbank is very much a Chinese company.

The fact remains that, despite the $10B budget, China has yet to land any major companies.

Perhaps Softbank on its own is front-running a bigger China budget.

Or perhaps Softbank was tapped to be the buyer, but not the ultimate buyer. After all, who is lending them to $31B to close the deal? And Softbank will earn a lot of political credits for doing a favor for the

Chinese government effort to ramp-up a semiconductor company.

Don't be surprised if we see an announcement in a year or two that ARMH is up for sale and the buyer is a major Chinese company.

This was a brilliant move.

http://www.zerohedge.com/news/2016-0...-company-world