SoftBank has gotten one step closer to acquiring a considerable stake in Uber, as the ride-hailing company will soon formally offer some of its shares to investors in exchange for billions of dollars from SoftBank.
According to a news report from Recode, this next phase – the “tender offer” process – will begin in the next few weeks, as Uber shareholders start to deliberate who will share their stake in the company, as well as get a better picture of how much they can expect to be paid per share.
A deal with the Japanese conglomerate, led by its CEO Masayoshi Son, could be a boost for Uber. The ride-sharing company has been hit with scandals, federal inquiries and lawsuits, including one brought against its former CEO, Travis Kalanick, by Benchmark, one of Uber’s early investors.
While some worry that a deal could empower Kalanick and undermine its new chief, Dara Khosrowshahi, reports say that Khosrowshahi is warm to the idea – especially since he also sits on the board of Fanatics, a sports retailer that just accepted $1 billion in funding from SoftBank.
The hiring of Khosrowshahi is likely to raise Uber’s share price. SoftBank initially approached Benchmark – and then, later, other Uber investors – for a deal at a valuation of $45 billion, about two-thirds of what private investors last estimated the company was worth. Uber is also expected to sell some new shares at a valuation that would preserve (at least on paper) its approximate $70 billion valuation.
While the assumed seller was Benchmark, sources say the company is worried that selling its shares would allow Kalanick to change Uber’s ownership structure, or cap table, giving the former CEO more internal power. It should come as no surprise that Kalanick is not looking to sell any of his shares.
If Benchmark isn’t selling, the next possible options are large shareholders like Uber co-founder Garrett Camp and first hire Ryan Graves.