Uber Lines Up 4 Investors, But a Deal Hangs on Boardroom Battle

Uber is in exclusive talks to line up funding from four investors, but a deal, which could reach as much as $12 billion, hangs on the outcome of a courtroom brawl between two board members, according to Bloomberg.

Funding would come from Japan’s SoftBank Group and Chinese ride-hailing juggernaut Didi Chuxing, along with U.S. equity firms Dragoneer Investment Group and General Atlantic, said people familiar with the matter. Goldman Sachs is advising Uber on the potential transaction. China’s Tencent has also explored contributing funds to the round.

An investment is expected to raise $1 billion to $1.5 billion for Uber at the same valuation from last year, said the people. A second component of the deal would allow a swath of current shareholders to cash out at a lower price than the current valuation. Investors could spend $2 billion to $10 billion buying out shareholders’ stock, a wide range that depends on demand from sellers, said one of the people.

A transaction hangs on Uber’s ability to resolve an ongoing fight between two of the company’s largest shareholders and most influential board members, two of the people said. Venture capital firm Benchmark is suing Travis Kalanick, the former CEO. Benchmark claims Kalanick defrauded investors and withheld information from directors when he sought to create three board seats last year. Kalanick denied the allegations in a statement and said he was “disappointed and baffled by Benchmark’s hostile actions.“

New investors may be given the power to appoint as many as two representatives to Uber’s board, the people said. But the lawsuit poses major complications. A group of three smaller Uber stockholders, led by Kalanick’s friend Shervin Pishevar, came to the former CEO’s defense on Friday. They want to buy most of Benchmark’s stock and take its board seat.

If Uber’s directors can resolve their dispute quickly, the two-pronged deal would allow the company to retain its valuation of about $70 billion on paper, while also giving panicked shareholders a way out. The four would-be investors in the new funding round are currently in the due-diligence period, and terms of the deal are still being discussed. The amount spent on shareholders’ equity and the price for their stock will depend on seller interest, the people said.