Uber board finally agrees to terms of $10b deal with SoftBank, but conditions apply

Illustration by Tech in Asia, from photo by Softbank.

Uber’s warring board members have finally agreed to terms for an investment by SoftBank that could be worth US$10 billion. But the Japanese giant could still walk away from the deal if its target for acquiring a minimum percentage of Uber stock is not met.

We are interested in Uber but the final deal will depend on the tender price and a minimum percentage shareholding for SoftBank.

“After a long and arduous process of several months, it looks like Uber and its shareholders have agreed to commence with a tender process and engage with SoftBank. By no means is our investment decided. We are interested in Uber but the final deal will depend on the tender price and a minimum percentage shareholding for SoftBank,” says Rajeev Misra, CEO of SoftBank Investment Advisors, in a statement released today.

The Japanese giant will lead an investment of US$1 billion in fresh stock at Uber’s current valuation of US$68 billion, reported The New York Times citing unnamed sources. SoftBank will then set a price to buy existing shares at a lower valuation through a tender process over the next month. It can still walk away from the deal if it does not reach a target of owning 14 percent of Uber shares, according to the NYT sources.

“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment,” an Uber spokesman confirmed.

Uber’s board had agreed to a change in governance structure to pave the way for the SoftBank deal over a month ago. But a tussle between co-founder Travis Kalanick and investor Benchmark had put the deal in limbo. Last week, SoftBank’s Masayoshi Son had floated a possible investment in rival Lyft instead.

This deal would make SoftBank a major investor in Uber as well as its Asian ride-hailing counterparts Didi, Ola, and Grab. The Japanese giant will thus be betting on ride-hailing tech being the winner, whichever company comes out on top in the end.

See: What SoftBank’s $10b investment in Uber means for its battle with Ola in India

If the deal goes through, it could end the boardroom battle between co-founder Travis Kalanick and early investor Benchmark that has bogged down Uber. But there can still be a slip between the cup and the lip.

Benchmark had initially wanted to retain certain shareholder rights from its Uber stock but agreed to waive them, according to NYT. It has also agreed not to prop up the share price during the tender process when SoftBank acquires Uber stock. And a lawsuit against Kalanick would be dropped after the tender process.

The completion of the deal will strengthen the position of new CEO Dara Khosrowshahi who had spoken out earlier, criticizing Kalanick’s moves behind his back to control the board.

This article has been updated to include a statement from SoftBank.