Softbank reaches deal to get big discount on Uber shares

Softbank reaches deal to get big discount on Uber shares

Softbank reaches deal to get big discount on Uber shares

Sources say SoftBank will likely limit its acquisition to 15 percent at a $48 billion valuation.

Softbank will invest $1 billion into Uber in hopes of ridding investor concerns the tender offer lowers the value of remaining shares, the Wall Street Journal reported. It also paves the way for an overhaul of the company after a turbulent year, complete with criminal probes, a lawsuit over trade secrets allegedly stolen from Google's self-driving auto division and internal investigations into its toxic company culture.

Kalanick stepped down in June following revelations that his company's culture had become toxic and encouraged sexism and inappropriate behavior. It marks the first significant piece of business for new CEO Dara Khosrowshahi, who is now preparing the embattled ride-hailing company to go public by 2019. Early investors like Benchmark Capital and Menlo are understood to be the ones that are selling the largest amount of Uber shares as part of SoftBank's offer and will see a return of approximately 3,600 times their investment. That stake includes a share purchase from earlier investors and employees at the US$48 billion valuation, as well as a US$1.25 billion investment of fresh funding at the US$68 billion level. The price is less important than locking in the governance changes and securing the support of the world's most powerful technology investor,"said Erik Gordon an entrepreneurship expert at the University of Michigan's Ross School of Business". Misra said SoftBank had "tremendous confidence in Uber's leadership and employees".

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Lucky for Uber, the company will still retain its title of "most valuable startup", as second place goes to WeWork, which is now valued at $31 billion. The closing of the deal will also mark the end of the company's supervoting share structure, moving the company to a "one share, one vote" system that further weakens the influence of early executives and shareholders. And the Uber deal will add to worries in Silicon Valley that the Japanese conglomerate can make similar demands on other investments. However some Uber investors were concerned the price SoftBank was offering was too low, according to Recode.

Uber hasn't had a great year.

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