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SoftBank succeeds in tender offer for Uber shares

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by December 29, 2017 General

By and Heather Somerville

(Reuters) – A consortium led by Group Corp <9984.T> will buy a large number of of Technologies Inc [UL] in a deal that values the ride-services firm at $48 billion, said on Thursday, in a victory for new

The price is a roughly 30 percent discount to Uber’s most recent valuation of $68 billion. The deal will trigger a number of changes in the way the board oversees the company, which is dealing with federal criminal probes, a high-stakes lawsuit and an overhaul of its workplace culture.

and the rest of consortium, which includes Dragoneer Investment Group, will own approximately 17.5 percent of Uber, a person familiar with the matter said. That stake includes a share purchase from earlier investors and employees at the $48 billion valuation, as well as a $1.25 billion investment of fresh funding at the $68 billion level.

said the deal will close early next year. On Thursday it said that existing investors had agreed to sell enough for to go through with the transaction.

itself will keep a 15 percent stake, while the rest of the consortium will own approximately 3 percent, according to a second person familiar with the matter.

Khosrowshahi, who took the top job in August after was forced to step down in June, helped negotiate the deal. is losing more than $1 billion each quarter, and a new cash infusion is critical. The company is also planning an initial public offering in 2019.

will use the investment “to support our technology investments, fuel our growth, and strengthen our corporate governance,” a spokesperson, who declined to be named, said.

When the deal is completed, the company will make governance changes, expanding Uber’s board from 11 to 17 members including four independent directors, limiting some early shareholders’ voting power and cutting the control wielded by Kalanick, who remains on the board and is still one of the largest stakeholders.

‘SMART THING’

“The stockholders did the smart thing. The price is less important than locking in the governance changes and securing the support of the world’s most powerful technology investor,” said an entrepreneurship expert at the of

Rajeev Misra, of SoftBank’s Vision Fund, a $98 billion tech investment vehicle, will join the board, reported. (http://on.wsj.com/2ChJNyS) will get two seats on the expanded board, a source told

Misra said in a statement that has “tremendous confidence in Uber’s leadership and employees.” board members agreed in early November to governance changes to pave the way for the deal.

Some initial investors in the consortium, including Atlantic, dropped out over disagreement about the price offered to shareholders, previously reported.

founder has taken a keen interest in ride-hailing companies around the world, and already has sizeable stakes in China’s Didi, Brazil-based 99, India’s Ola and Grab, all of which have competed with last week raised $4 billion, including some investment from

The investment comes after a year of troubles for the company, including a lawsuit by Alphabet Inc’s self-driving car unit that alleges trade-secrets theft and federal investigations that span possible bribery of foreign officials in Asian countries and the use of software to evade regulators.

Over the past year, a former employee’s charges of endemic sexual harassment led to an internal review, said it is stripping of its license and revealed it had covered up a major hack.

(Reporting by and in San Francisco. Additional reporting by by in Bengaluru. Writing by Peter Henderson; Editing by Anil D’Silva, and Susan Thomas)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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