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 share purchases ever.
The agreement lets SoftBank, the investment firm Dragoneer, and others invest at least $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. A slate of Uber governance changes hangs on the transaction closing.
“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.”
SoftBank, along with Dragoneer 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 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.
Rajeev Misra, CEO of SoftBank’s $93 billion tech investment fund, warned that the company could walk away if Uber shareholders demand too much. “By no means is our investment decided,” he said in a statement. “We are interested in Uber but the final deal will depend on the tender price and a minimum percentage shareholding for SoftBank.”