SAN FRANCISCO: Uber’s board of directors Tuesday approved a plan that reins in the influence of ousted chief executive Travis Kalanick and opens the door to a colossal investment by Japanese telecommunications giant SoftBank.
The proposal adopted by Uber’s board also promised to put an end to infighting between Kalanick supporters and investors who suspected the co-founder was plotting a wily return to the company’s leadership.
“Today, after welcoming its new directors Ursula Burns and John Thain, the board voted unanimously to move forward with the proposed investment by SoftBank and with governance changes that would strengthen its independence and ensure equality among all shareholders,” Uber said in an emailed statement.
“SoftBank’s interest is an incredible vote of confidence in Uber’s business and long-term potential, and we look forward to finalizing the investment in the coming weeks.”
If the investment goes ahead as proposed, SoftBank would directly pump between $1 billion and $1.25 billion into Uber at the San Francisco-based startup’s current valuation of $69 billion, according to a source familiar with the matter.
As a secondary investment move, the Japanese group would put out an open offer to buy 14 percent to 17 percent of outstanding shares from large investors at a discounted price, the source said.
Major investors who are unhappy with the leading smartphone-summoned ride share startup, or who want to cash-in on early investments that have multiplied in value, could take SoftBank up on the offer.
Governance changes approved by the board hinge on the SoftBank investment taking place.
Changes included eliminating “super-voting” power of some shares, such as those owned by Kalanick, to shift to a one vote per share model that would curtail the co-founder’s clout, according to the source.
The board also endorsed Uber going public with a stock market debut by the year 2019.
The board itself would expand from 11 seats to 17 seats, with two of the additions going to SoftBank and the other four being independent. One of the four independent seats would chair the board.
Rule changes for the board would include requiring two-thirds or more of the board to approve any new chief executive hired before the stock market debut, signaling that newly-appointed boss Dara Khosrowshahi would be safely ensconced at the startup.
If all of those piece fall into place, a lawsuit filed by early Uber investor Benchmark Capital will be dropped, ending a distracting power struggle at the company, the source told AFP.
Kalanick last week unilaterally appointed two new members to the board of directors in a surprise move that increased tension within the leadership.
Kalanick, who was pressured to resign in June as head of Uber, retains sizeable voting rights in the privately-held company due to his ‘super-vote’ shares.
He appointed former Xerox CEO Ursula Burns and former Merrill Lynch CEO John Thain to the board on Friday “in light of a recent Board proposal to dramatically restructure the board and significantly alter the company’s voting rights,” Kalanick said at the time.
Kalanick’s move was a finger in the eye of major Uber investor Benchmark Capital, which earlier filed a civil lawsuit accusing him of fraud, breach of contract and of plotting to manipulate the board of directors to allow him to return as CEO.
Uber’s board of directors is split between detractors and supporters of Kalanick, who had been the driving force behind the company’s massive global expansion but whose brash style made him a liability.