SoftBank Group sealed its deal with Uber Technologies on Thursday and became the biggest shareholder in the controversy riddled ride-services company. SoftBank and Dragoneer Investment Group co-led the investor group that included Sequoia Capital. In addition to this deal which was done at a discounted valuation of $48 billion for the ride-services company, an investment of $1.25 billion at an earlier higher company valuation of $68 billion was also made by the investor group. Nasdaq Private Market will see the completion of these secondary stock sales end Thursday.
The total stake of the investor group amounts to 17.5% with SoftBank’s share limited to 15%. Incidentally, SoftBank has investments in Uber’s competitors such as India’s Ola, China’s Didi and Southeast Asia’s Grab.
The governance changes post-deal includes expansion of the Board from an earlier 11 to 17 counting the four independent directors, limiting the voting power of early shareholders while diminishing the power of Kalanick. Uber’s Board of Directors will include two representatives from SoftBank namely Rajeev Misra, currently SoftBank’s Vision Fund’s Chief Executive and Marcelo Claure, President and CEO of Sprint Corp and a Board member of SoftBank.
Misra’s view was that Uber could increase its profitability rapidly by changing the focus of its operations from Asia to Europe, Latin America, Australia and the United States. He felt that the company which so far had been bogged down by federal criminal probes, lawsuits, huge data breach had a bright future under the new leadership of Dara Khosrowshahi. Misra’s comments were first reported by ‘The Financial Times’.
With early investor, Benchmark Capital being forced to move out, this deal too had its own share of power struggles before it could go through. The investor group managed to rake up sufficient stock sellers willing to see the deal being finalized with the new CEO having a large hand in seeing it through. A third of the 10% stake held by Kalanick was sold for $1.4 billion though he had offered to divest about half of his share holdings.