Japan's SoftBank may secure stake in Uber

Japan's SoftBank may secure stake in Uber

Japan's SoftBank may secure stake in Uber

Softbank will buy Uber shares using a process known as a tender offer that completes in a month.

According to the New York Times, the terms of the agreement include suspending and ultimately scrapping the lawsuit Benchmark filed against embattled former CEO Travis Kalanick.

Uber Technologies Inc., a USA ride-hailing giant, agreed Sunday on an investment by Japanese technology conglomerate SoftBank, which may make Uber to go public, local media reported.

"We believe this agreement is a strong vote of confidence in Uber's long-term potential", it added.

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"Upon closing, it will help fuel our investments in technology and our continued expansion at home and overseas, while strengthening our corporate governance", he said.

Currently Uber's largest shareholder is U.S. venture capital firm Benchmark with a 13 percent stake and founder Travis Kalanick who has a 10 percent stake. He still has a seat on the company's board.

SoftBank shares were down 0.75 percent on the news with Makoto Sengoku, market analyst at Tokai Tokyo Research Centre, saying that investors were underwhelmed with the news. Uber wants to strengthen its corporate governance.

But the Japanese firm voiced caution, saying: "While the SoftBank Group side is considering an investment in Uber, there is no final agreement at this stage". Is Uber still worth $68bn? During that process, a price will be set for the existing Uber shares. If the new deal is closed, the SoftBank-led consortium will own about 14 percent stake in the ride-sharing pioneer, now valued at around US$68 billion. "I'm sure Uber will continue to grow from strength to strength in India and South Asia", Kohli said in an e-mailed statement.

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Softbank has yet made no comments on the deal.

The transaction may make Kalanick a cash billionaire if he decides to sell a large enough chunk of his stake in the company. Early employees also stand to sell for significant sums.

Uber plans to run newspaper ads informing investors about the share purchase. If SoftBank doesn't get enough buyers, it could propose a higher price or walk away.

Consolidated Earnings & Price Target Update
The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this link . After a recent look, shares have been seen -3.42% from the 200-day moving average, and -6.40% from the 50-day moving average.

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