After months of talks, SoftBank Group is close to finalizing its investment in Uber. Multiple sources tell TechCrunch that the deal is expected to be signed later in the day on Sunday.
SoftBank plans to lead a $1 billion investment directly in the company alongside Dragoneer Investment Group. The joint venture will also buy up to $9 billion of shares from eligible existing shareholders in a tender offer, with the total investment amounting to at least 14% of Uber’s shares. Private equity firm General Atlantic is also participating.
Bloomberg, which first reported the news, said that venture capital firm Benchmark Capital will be dropping its lawsuit against former CEO Travis Kalanick, as a condition of the deal. We’re told that this is happening as long as enough shareholders sell shares to execute the tender offer. An agreement has also been struck that would require a vote for any future board appointments by Kalanick, should Ursula Burns or John Thain give up their seats someday.
One source close to the situation tells TechCrunch that Benchmark could technically invest more money in Uber through the tender offer, but is mostly expected to sell shares.
The direct investment in Uber is expected to be the same valuation of Uber’s last private round, at nearly $70 billion. We’re told that the documents label this deal as an extension of its last Series G round.
But the tender offer is planned to be a lower price per share, which has yet-to-be-determined. It is expected to be the largest secondary transaction in history.
An Uber spokesperson declined to comment.
At least one source with direct knowledge of the situation said that the tender is slated to launch on November 28 and last until the end of the year. This source claims that the end of 2017 put pressure on finalizing the deal so that shareholders could sell shares in time for the holidays.
But the tender offer is supposed to last 20 business days and some are questioning whether employees will really get paid by the start of 2018.
At one point, the deal was expected to launch in September. But there have since been a series of delays, partly related to valuation and partly related to negotiating Kalanick’s role.
We’re also told that Uber is having a tough time identifying and tracking down all of its existing shareholders. Uber plans to run newspaper ads as an attempt at notifying them about the tender offer.
This is a big turning point for Uber’s workforce. Until recently, most employees were restricted from selling shares, a key form of compensation at startups.
At one point, Uber employees wondered if they would have to wait until an IPO to find liquidity. But recently, the company began introducing buybacks, which a couple hundred employees have participated in.
The tender offer will provide an opportunity for a larger group of employees, potentially thousands, to sell shares. Uber is not expected to go public until 2019.
It’s also significant for Uber, which has had a tumultuous year. After legal battles, including a patent lawsuit with Alphabet’s self-driving car division, and public outcry about its company culture, co-founder and CEO Travis Kalanick was pressured to resign in June.
Dara Khosrowshahi, who had been CEO of Expedia, was appointed the new chief executive at Uber in August.