Uber has finally accepted the offer by SoftBank Group Corporations to buy a significant stake in the ownership of the ride-hailing company. This is by far the largest investment in any startup by a well-established financial institution.
According to the pact, SoftBank has agreed on an investment up to $1 billion in the cab-service company and the agreement clarifies that the acquiring company would be required to buy up to $9 billion shares of Uber from the existing shareholders in the market. The deals can be considered to be void if there aren’t enough interested stakeholders who are willing to sell the shares.
The company stated,
We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment, We believe this agreement is a strong vote of confidence in Uber’s long-term potential. Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.
This deal has been in discussions and negotiations for many months now. There has been a third-party intervention in this entire deal which has stayed anonymous yet. Uber held its joint meeting a week back where the board of directors and lawyers were asked to give their legal and corporate opinion on the matter of partnership.
The venture capital firm, Benchmark, has also put its lawsuit against the Uber co-founder, Travis Kalanick, on hold while this partnership process takes place. The matter has been seen a life-changing decision for the established startup.
The pact is referred to as the revolutionary initiative for Uber due to the scandalous and controversial image of the cab-driving company. SoftBank, a Japanese tech company, has finally stepped forward to bolster the brand image of Uber. SoftBank is one of the prime investor of many startups including Ola, Grab, and many other companies.
SoftBank has agreed to buy the shares of Uber at a single price as long as sellers are not augmenting the price of Uber artificially by overwhelming trading. This deal has also enabled Kalanick to withhold its lawsuit.