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Two of Uber’s largest shareholders agreed on Tuesday to sell some of their shares in the world’s most valuable startup to SoftBank in an early sign of momentum for a massive private stock sale.
Benchmark and Menlo Ventures, two firms that this summer pushed for the ouster of former Uber CEO Travis Kalanick, will sell some of their positions in the company as part of the tender offer, a SoftBank spokesperson said. But the deal, which values Uber on secondary markets at 30 percent less than its last private fundraising round, has already driven away one buyer that had been expected to be part of SoftBank’s consortium: General Atlantic, which felt the price of the deal was actually too high, according to a source familiar with the matter, among other concerns.
Uber alerted eligible shareholders of the long-expected bid on Tuesday evening — these investors and early employees have 20 business days, until noon on December 28, to decide whether they want to sell their ownership in the company at the $48 billion valuation, or instead wait for the company to go public in 2019.
“SoftBank and Dragoneer have received indications from Benchmark, Menlo Ventures, and other early investors of their intent to sell shares in the tender offer,” a SoftBank spokesperson said in a statement Tuesday. “Any sales by these shareholders will be pursuant to the same terms and conditions as will be offered to all other eligible holders that participate in the tender offer.”
The SoftBank-led group is trying to buy around $8 billion worth of shares from existing investors in the company, paying about $33 for each individual share, according to the tender documents circulated to investors.
The deal has taken on enormous importance for the troubled company, which has weathered a difficult year marred by allegations of sexual harassment, lawsuits and infighting that ultimately led to Kalanick’s ouster. If the deal were to fail — and at the current asking price, a number of investors have privately told Recode they would not sell — Uber could once again find itself mired in the same drama.
The deal is attached to governance reforms that amount to a grand bargain for Uber and its shareholders. Alongside the new funding will come a series of changes to Uber’s board and voting structure that are meant to disempower Kalanick and the investors he sparred with, most prominently Benchmark.
Benchmark’s decision to sell is an early sign that the tender offer could succeed despite the low price per share. The venture firm had signaled that it would only sell if Kalanick could be sufficiently restrained; it sued him earlier this year in an unprecedented lawsuit arguing that he defrauded the board, on which Benchmark sits.
The storied firm had also said publicly that it considered Uber to be worth $100 billion soon, suggesting that it would not sell shares at a valuation that is merely half that.
Recode reported this weekend that Menlo had been seen as likely to sell.
It was not immediately clear how much Benchmark or Menlo are prepared to sell. Benchmark owns 13 percent of the company, and the deal would be on substantially shakier footing if they decided to hold onto all of their shares.
Other likely sellers include Garrett Camp, Kalanick’s fellow founder, and possibly First Round Capital and Google Ventures. Kalanick’s successor, CEO Dara Khosrowshahi, has been encouraging every major Uber shareholder to part with some of their holdings in order to make sure that SoftBank accumulates a 13.4 percent stake in the company, which is required for the secondary transaction — and the governance reforms sought by Khosrowshahi — to succeed.
The SoftBank-led consortium will also invest about $1 billion of new money at Uber’s current valuation should the deal happen — all told, the transaction will value Uber at around $54 billion, according to the source familiar with the matter. That consortium also includes Dragoneer Investment Group, but no longer features General Atlantic or DST and some other initial buyers due in part to the price, the source said.
New buyers, according to the tender documents, include Tencent, the Chinese company, Sequoia Capital, a top-tier U.S. venture fund that has not previously invested in Uber or Lyft, and TPG, which sits on Uber’s board and is now looking to increase its already substantial ownership position in the company.
Many early employees — those with at least 10,000 shares — are expected to jump at the chance to turn their on-paper wealth into possibly millions of dollars. But they together only hold a few percentage points of ownership in the company.
This article originally appeared on Recode.net.
