A consortium led by Japanese telecommunication giant SoftBank will pick up 18 percent stake in the ride-hailing major Uber Technologies Inc, Uber said on Thursday. The new development will be seen as a major triumph for company’s new CEO Dara Khosrowshah. The deal that valued the ride-hailing firm at $48 billion (30% discount from its earlier valuation of $68 billion) will end up making some of the company’s earliest investors and employees overnight billionaires.
SoftBank will take up 15% stake in the company after the deal is closed early next year, as per people familiar with the matter, while the co-investors in the consortium will own merely 3 percent stake in the company.
This deal will have major ramifications over company’s decision-making process and work culture. Here is a look down at things that are set to change from here on at the world’s most valued startup company.
- Uber’s board of directors meeting will now witness fewer skirmishes and infightings, with the company now preparing to enact governance reforms that will seek to discourage any disharmony or tensions within the board members. Besides, now Uber board will now expand to 17 members, with two more members coming from SoftBank.
- One of Uber’s existing investors Benchmark is reportedly mulling to drop its lawsuit against the former CEO Travis Kalanick in order to bring down tensions among the board members.
- Kalanick will see his power reduced in the decision-making process. The former CEO and co-founder, who was forced to step down earlier this year, is still one of the largest shareholders in Uber.
- A major overhaul in company’s work culture will be carried out to control sensitive issues like sexual harassments, which was one of the major issues that led to the resignation of Kalanick.
One of Uber’s speakers, on condition of anonymity, said that the company will be using the SoftBank funding to further increase its technology investments and consolidate corporate governance.
The funding will come as a major boost for the beleaguered firm, which reportedly is incurring whopping $1 billion loss in every quarter. Earlier this week, the company decided to sell one of its loss-making subsidiary companies ‘Xchange Leasing’ in order to cut down on heavy losses. The ride-hailing juggernaut has been on a huge rejig exercise ever Khosrowshah took over the mantle of the company in August this year. Industry experts claim that this new development will come as a major shot in the arm for the new CEO.