Scandal hit ride-sharing company Uber on Sunday announced a deal to sell a stake to Japan’s SoftBank, as the firm looks to turn a new page ahead of its planned IPO by 2019.
The move was unveiled shortly after reports emerged that its former CEO Travis Kalanick and an influential investor had buried the hatchet in a long feud that paved the way for the acquisition.
“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment,” a company statement said in a statement Sunday evening.
“We believe this agreement is a strong vote of confidence in Uber’s long-term potential,” it added.
“Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.”
But SoftBank refused to confirm the news when contacted by AFP and said it was not planning to issue any statement on Sunday.
The Japanese group, founded by billionaire Masayoshi Son, expressed an interest several months ago in investing around $1 billion in Uber for a stake of at least 14 percent.
But the deal was threatened by conflict between Kalanick and US venture capital firm Benchmark.
The latter filed a lawsuit against Kalanick, accusing him of fraud, breach of contract and of plotting to manipulate the board of directors to allow him to return as CEO following his resignation in June.
The two parties reportedly reached an agreement on control of board seats, which included Benchmark putting its lawsuit on hold — while Kalanick will allow directors to vote on his future appointments to the three seats he oversees.
A deal would be positive for Uber, which is looking ahead to the future in the wake of recent repeated scandals, among them workplace sexual harassment allegations.
Meanwhile, SoftBank has been diversifying through investment for several years, and has ventured into sectors outside its core mobile technology business — completing deals with the likes of French robotics firm Aldebaran and e-commerce with Chinese giant Alibaba.
It is sending tremors through the tech world with a its massive new Vision Fund — a venture capital fund with $100 billion coffers intended for startups and expected to dominate the industry so thoroughly it’s playfully referred to as a “gorilla.”
“SoftBank shows a remarkable amount of bravery, confidence and optimism to look to apply this much money in technology,” said Bill Maris, who started Google Ventures nearly a decade ago and runs his own California-based investment firm Section 32.
“I can’t say it’s a wrong bet, if you think the trends in tech will continue in the future. I would be much more worried if SoftBank was saying tech is dead.”
Some investors worry that the Vision Fund will buy into startups at high prices, overinflating the market, while crowding out other investors and prolonging the time it takes for young companies to go public.
SoftBank has outlined plans to focus on late-stage investments when startups are more established, and on investments of at least $100 million.