Japanese technology giant SoftBank reached an agreement with ride-sharing startup Uber to make an investment in the billions of dollars.
Uber Technologies confirmed the investment during a statement made Sunday but did not release any details.
However, a source who was briefed about the deal has told the Associated Press that the Japanese conglomerate would buy $1 billion of new stock in Uber, then would offer to buy shares from Uber investors and employees with a goal of eventually have a stake of 14% in the business.
Currently Uber has a value of $68.5 billion, but the stock offers will be determined from less of a valuation, therefore it is not known how much the complete deal will be worth, the source said, who requested anonymity due to the details not being released yet.
The statement by Uber said it had reached a deal with a consortium that Softbank and Dragoneer Investment led. The deal is a big boost of confidence for the company’s potential and is going to help fuel investments we will make in technology and the continued expansion both in the U.S. and abroad, and at the same time strengthen the corporate governance, said the Uber statement released on Sunday.
The move opens the door for Uber, one of the most valuable tech companies worldwide, to sell stock to the public, as this deal creates an initial public offering that will take place prior to the end of 2019.
Those types of deals with IPOs usually take time before being finalized, since they involve many investors.
The deal, which has been long-awaited, was first made public last Monday, but delayed by corporate governance and a legal problem between Benchmark Capital an investor and Travis Kalanick a co-founder and former CEO.
The feud was ended on Sunday between the two sides, which cleared the way for the investment by SoftBank, said the source.
Kalanick, who has control over three of the board’s 11 seats at Uber, has agreed to allow the majority of the board to vote on any further appointments that he makes, according to the source.
Benchmark agreed it would suspend its lawsuit against the former CEO and drop it once the one month tender is completed by SoftBank that starts in approximately two week.
Benchmark, which is a big venture capital business in Silicon Valley that was amongst the early backers of Uber, alleged in its lawsuit that Kalanick had covered up problems and legal threats while at Uber.