Lots of big news out of Uber this week: The ride-sharing firm that got the gig economy off the ground has announced that it is accepting an investment from Japan’s SoftBank.
The investment will be between $1 billion and $1.25 billion at the company’s last reported valuation of $69 billion, sources told CNBC.
On top of that news — the board has also passed a resolution to go public by 2019.
As part of the latest deal, Uber’s board will grow from 11 to 17 seats, two of which will be occupied by SoftBank. One other will go to a chairperson while four seats remains reserved for independent actors.
“Today, after welcoming its new directors Ursula Burns and John Thain, the Board voted unanimously to move forward with the proposed investment by SoftBank and with governance changes that would strengthen its independence and ensure equality among all shareholders. SoftBank’s interest is an incredible vote of confidence in Uber’s business and long-term potential, and we look forward to finalizing the investment in the coming weeks,” noted Uber in a release on the news.
Board member and former CEO Travis Kalanick said the investment bodes well for the company’s future as it heads to an IPO.
“Today the Board came together collaboratively and took a major step forward in Uber’s journey to becoming a world-class public company. We approved moving forward with the SoftBank transaction and reached unanimous agreement on a new governance framework that will serve Uber well,” Kalanick noted.
The change has a lot of downside for Kalanick — who, along with early investors, loses a lot of power. Kalanick’s large holdings of Class B shares, which awarded him 10-to-one voting power, will transform so that each shareholder has one vote per share, the Times reported. This does not sit well with early investors like Shervin Pishevar and Steve Russell, who had super-voting shares.
The two investors have already issued a statement affirming their intention to file a class action lawsuit:
“Today’s action by the board was the culmination of a blatant bait and switch, essentially robbing loyal employees, including the more than 200 early founding Uber employees and advisors, of their hard-earned shareholder rights worth billions in value.”