A “peace deal” to settle an ugly boardroom war at Uber is expected to be signed today or tomorrow. If all goes well — and this is a big “if” still since, well, Uber — it should clear the way for a multi-billion dollar tender offer by SoftBank and other investors that would allow employees to sell up to half their stock in the car-hailing giant.
Bloomberg first reported on the wide-ranging agreement that was struck this weekend to bring an end to the acrimony between former CEO and Uber co-founder Travis Kalanick and its major investor Benchmark.
Sources confirmed that the two sides had each agreed to give up some leverage to come to terms, after continued infighting over the last few weeks had delayed an effort to move forward with new governance reforms.
“It would have happened sooner, but the paranoia on both sides never let up,” said one source close to the situation, who noted that an ultimatum to end the investment move by other board members and new Uber CEO Dara Khosrowshahi at a meeting yesterday finally broke the impasse. “It took entirely too long, but we have an agreement.”
Under the deal — which has not yet been signed — Kalanick will maintain his own seat on the board and also the right to appoint two other seats. He had done that unilaterally last month, causing much consternation. But those two seats will be subject to majority board approval in the future.
For its part, Benchmark has agreed to suspend its lawsuit against Kalanick and will drop it entirely once the SoftBank investment is completed.
Still, the situation will remain dicey until then, because now the tender offer — which will initially value the company at $40 billion to $50 billion — must be successful. Under terms of the deal agreed on, those eligible employees with stock options are capped at selling half their holdings (and those with restricted stock units cannot sell in this round). Other shareholders can sell as much as they want, although many big investors might not want to do so.
It will be interesting to see if Kalanick and Benchmark sell any shares at all. While the venture firm is more likely to do so, Kalanick has been one of the most stubborn about stock sales until now. Sources said that he remains entirely uninterested in money — this is true — although parting with even a small amount of his shares will make him a billionaire.
Other Uber early employees would become millionaires many times over if they sell too (so San Francisco real estate sales people will have Christmas in, um, December, I guess!).
But if not enough shares are tendered in a deal that could total $9 billion, that could be a big problem. Japan’s SoftBank and its partners — including Dragoneer Investment Group and General Atlantic — are seeking more than 15 percent of the overall shares and will have to up the price if enough sellers do not emerge.
Publicly, the company has said it will not overpay for Uber, which has previously been valued at up to $70 billion. Sources said there are no side deals for shares at that higher price.
Among the governance changes that will happen once the tender is complete are a larger Uber board and making all share classes of equal voting power.
The notion of a “peace deal” at the notoriously troubled company is a nice one to contemplate. One source close to the situation said that while Uber is not yet out of the woods on its internecine battles and that the distrust between Kalanick and Benchmark still exists, it is nonetheless a delicate step in the right direction.
“Trust but verify,” joked that source, using a Russian proverb that was widely used back in the Reagan era. “Okay, maybe not trust.”
This article originally appeared on Recode.net.