In a process known as a tender offer, which allows outsiders to buy shares in a private company at a mutually agreed upon price, some Uber employees, executives and early investors sold off what amounted to a little more than a 17% stake in the company to a consortium of investors led by SoftBank, according to a source familiar with the transaction.
The deal will also benefit Uber's employees, drivers and riders, said Chris Sacca, founder and head of Lowercase Capital, a major Uber shareholder that did not sell shares in SoftBank's tender offer.
The price offered for the shares valued the firm at $48bn and was a discount to Uber's most recent fundraising round, but for some of the firm's earliest investors could provide a big payoff. Earlier reports have indicated that Dragoneer Investment Group and existing Uber backer General Atlantic may be among the interested parties.
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.
But the discount is a humbling coda on a rough year for Uber, which has been rocked by a series of scandals, from claims of sexual harassment to revelations of a program meant to deceive law enforcement.More news: Calcium, vitamin D supplements may not lower fracture risk in elderly
The agreement with SoftBank, however, may bring much needed stability to Uber.
The Uber deal marks the latest massive investment by SoftBank's $93 billion Vision Fund. We have tremendous confidence in Uber's leadership and employees and are excited to support Uber as it continues to reinvent how people and goods are transported around the world. The company is also planning an initial public offering in 2019. SoftBank required a minimum threshold of a 14 percent stake of the company to proceed with the deal.
Uber said the investment would fuel its expansion and technology investments.
When the deal is completed, the company will make governance changes, expanding Uber's board from 11 to 17 members including four independent directors, limiting some early shareholders' voting power and cutting the control wielded by Kalanick, who remains on the board and is still one of the largest stakeholders.