from the losing-money-each-ride-but-will-make-it-up-in-volume dept.
Uber Technologies Inc's warring board members have struck a peace deal that allows a multibillion-dollar investment by SoftBank Group Corp to proceed, and which would resolve a legal battle between former Chief Executive Travis Kalanick and a prominent shareholder.
Venture capital firm Benchmark, an early investor with a board seat in the ride-services company, and Kalanick have reached an agreement over terms of the SoftBank investment, which could be worth up to $10 billion, according to two people familiar with the matter.
The Uber board first agreed more than a month ago to bring in SoftBank as an investor and board member, but negotiations have been slowed by ongoing fighting between Benchmark and Kalanick. The agreement struck on Sunday removed the final obstacle to allowing SoftBank to proceed with an offer to buy to[sic] stock.
Also at TechCrunch.
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SoftBank Group Corp. Chief Executive Officer Masayoshi Son told President-elect Donald Trump he would create 50,000 new jobs in the U.S. through a $50 billion investment in startups and new companies.
The money will come from SoftBank's previously announced $100 billion technology fund, according to a person familiar with the matter. That investment vehicle has a $45 billion commitment from the government of Saudi Arabia and $25 billion from Tokyo-based SoftBank, which operates technology and wireless companies around the world.
[...] Some investments from SoftBank's fund, which was unveiled in October, were probably destined for the U.S. anyway, given the nation's leadership in the global technology industry. But Son hadn't previously committed to creating a specific amount of jobs through the investment vehicle.
[SoftBank Group Corp.'s Masayoshi] Son reiterated his belief that computers will exceed humans in intelligence in three decades, and that within this period he expects one computer chip to have the equivalent of a 10,000 IQ. "I really believe this," he said at a keynote speech at the Mobile World Congress in Barcelona on Monday. The growth in computer ability was "why I acquired ARM," he said.
[...] SoftBank is aiming to close the first round of investment in its technology Vision Fund by the end of this month, people familiar with the matter have said. The initial investments will likely include $45 billion from Saudi Arabia and $25 billion from SoftBank, as well as $1 billion each from Apple Inc., Qualcomm Inc. and Oracle Corp. Chairman Larry Ellison, they said. The initial round is likely to exceed $80 billion and the timing of the closing may still change, said one of the people.
"We believe the singularity is inevitable and all businesses will be redefined as computers overtake humans in intelligence," Son said at an earnings briefing in November.
SoftBank recently bought U.S. private equity firm Fortress, which oversees around $70 billion of assets. It paid $3.3 billion, $1 billion more than the firm's market value. Fortress will help manage the SoftBank Vision Fund.
SoftBank will reportedly sell a 25% stake in ARM ($8 billion) to the ~$100 billion investment fund it has jointly created with Saudi Arabia, Apple, and others. ARM Holdings was bought by SoftBank for around $32 billion last year.
SoftBank Chairman Masayoshi Son met with Saudi King Salman during the King's state visit to Japan. Son gave the King one of his company's humanoid robots. Saudi Arabia is seeking investors as it prepares to launch an initial public offering for Saudi Aramco. Toyota agreed to conduct a feasibility study into the idea of production in Saudi Arabia, the result of one of twenty memorandums of understanding signed by Japanese companies and institutions with Saudi Arabia.
Over a year after signalling its intentions to dump the robotics demonstration company Boston Dynamics, Alphabet/Google has finally found a buyer: SoftBank. SoftBank acquired ARM Holdings for around $32 billion in 2016. Google also offloaded another robotics company, Schaft:
Google's ambitions for Boston Dynamics were never really clear. Before being acquired, the robotics company was mostly funded by DARPA—the US military's research division—with the express purpose of creating militarised robots. Within a year of being picked up, though, Google announced that it would no longer pursue any DARPA contracts, presumably to focus on possible commercial uses for the bots. No commercial robots ever emerged.
SoftBank, however, has had success with commercialising robots—specifically the small humanoid robot Pepper.
Previously: Pentagon Scientists Show Off Robot And Prosthetics
Google's Noisy "BigDog" Robot Fails to Impress U.S. Marine Corps
Google's Latest Boston Dynamics Robot Takes a Stand
Boston Dynamics Produces a Wheeled Terror as Google Watches Nervously
In a move that has not amused some of the company's investors and board members, Uber's former CEO Travis Kalanick has appointed two new members to Uber's board. The move has been described as a "power play":
Kalanick said in an announcement late Friday that he had appointed Ursula Burns, Xerox Corp.'s former CEO, and John Thain, the ex-Merrill Lynch chief, to the startup's board. Uber challenged the appointments, calling them "a complete surprise."
The former CEO is defending himself against a lawsuit brought by Uber's largest shareholder, Benchmark, over his authority to fill the two board seats. Kalanick says he controls three of the company's eleven board seats. Benchmark is suing Kalanick for fraud and has asked him to relinquish control of board positions. The suit is in private arbitration.
Kalanick resigned as CEO on June 20 after Benchmark and a group of early investors asked him to step down. Uber's board has been rife with infighting and underwent a contentious process to select former Expedia Inc. CEO Dara Khosrowshahi as its new chief.
"I am appointing these seats now in light of a recent board proposal to dramatically restructure the board and significantly alter the company's voting rights," Kalanick said in a statement emailed to Bloomberg. "It is therefore essential that the full board be in place for proper deliberation to occur, especially with such experienced board members as Ursula and John."
Saudi Arabia is planning to build a new $500+ billion city on the coast of the Red Sea. The zone will be connected to Jordan by land and Egypt by a bridge across the Red Sea. SoftBank's Vision Fund will buy a stake in the state-owned Saudi Electricity Co., which will power the city using clean energy. The project is called NEOM:
Saudi Arabia has unveiled plans to build a new city and business zone - a project that will be backed up by more than $500bn (£381bn) in investment.
Crown Prince Mohammed bin Salman says the 26,500 sq km (10,232 sq mile) NEOM zone will be developed in the north-west, extending to Egypt and Jordan.
It will focus on nine sectors including food technology and, energy and water.
The crown prince has been leading a drive to move Saudi Arabia away from its dependence on oil revenues.
In August, the Gulf kingdom launched a massive tourism development project to turn 50 islands and other sites on the Red Sea into luxury resorts.
However, the extremely ambitious nature of Mohammed bin Salman's vision is sure to raise questions about how realistic it is, the BBC's economics correspondent Andrew Walker says.
What is "NEOM"? "Neo" (Latin for "new") + "Mostaqbal" (Arabic for "future").
SoftBank thinks Uber is valued over $20 billion too high, although other investors may disagree:
SoftBank is preparing to buy shares of Uber at a price that values Uber at only $48 billion, a steep 30 percent discount rate for ownership in the company, which was last valued at almost $70 billion.
That's in line with what Uber investors were expecting; Recode reported this weekend that the price could be as low as $48 billion or as high as $52 billion. The $48 billion price, confirmed by a person with knowledge of the figure, will however raise concerns about whether the secondary sale will succeed — SoftBank needs to accumulate 14 percent of the company's shares to trigger the so-called "tender offer."
Uber Technologies Inc said on Thursday that it discussed a massive data breach with potential investor SoftBank Group Corp ahead of going public with details of the incident on Tuesday.
The ride-hailing service is trying to complete a deal in which the Japanese company would invest as much as $10 billion (£7.52 billion) for at least 14 percent of Uber, mostly by buying out existing shareholders.
"We informed SoftBank that we were investigating a data breach, consistent with our duty to disclose to a potential investor, even though our information at the time was preliminary and incomplete," Uber said in a statement.
"We also made clear that our forensic investigation was ongoing," Uber said. "Once our internal inquiry concluded and we had a more complete understanding of the facts, we disclosed to regulators and our customers in a very public way."
Maybe they should wait for the stock to collapse first.
Also at Bloomberg.
Previously: SoftBank to Invest Billions in Uber
SoftBank has finally secured a large stake in Uber that devalues the company and reduces former CEO Travis Kalanick's influence on the company:
Japanese tech giant SoftBank Group has bought a 20 percent stake in Uber, completing a months-long process, according to the Wall Street Journal. The move drops Uber's value by about 30 percent from around $70 billion to $48 billion — a reflection of the trouble that the ride-hailing company has experienced across 2017.
More important than the valuation change, though, could be the impact SoftBank's new stake will have on the influence former CEO Travis Kalanick still has on the company. Kalanick resigned from his post earlier this year after a number of scandals, but still maintains a seat on the company's board of directors, where he is surrounded by allies and controls 16 percent of the voting power.
The SoftBank deal triggers new governance terms at Uber that were approved by the company's board in October, though. The size of the board will expand from 11 to 17, which dilutes the power Kalanick wields. Two of those seats will go to SoftBank.
Uber is selling its South East Asia ride-share and food delivery businesses to regional rival Grab. The move marks a further retreat from international operations for Uber, after it sold its China business to local rival Didi Chuxing. Both firms describe the deal as a win for their passengers, but analysts warn it could mean higher prices.
Grab is South East Asia's most popular ride-sharing firm with millions of users across eight countries. Under the terms of the deal, Uber will take a 27.5% stake in Singapore-based Grab. Uber's chief executive, Dara Khosrowshahi, will also join Grab's board.
[...] real victory unquestionably belongs to Masayoshi Son's SoftBank Group Corp., the single-biggest investor in both companies. As I wrote earlier this month, by engineering a retreat for the U.S. company before any more bloodletting for market share, Son ensures that six-year-old Grab will emerge as an early champion in a winner-takes-all business.
A faster path to profit for Uber could also boost its valuation ahead of a planned IPO next year. But at what cost? Having already surrendered China to Didi Chuxing, beating a retreat from Southeast Asia is a precursor to perhaps losing India, the lone remaining jewel in Uber's once-flourishing Asian empire.
In India, once again, SoftBank is the largest investor in Uber's main rival, Ola. Competition between the two apps has become ridiculous. For all the PR gobbledygook on how happy Uber and Ola drivers are, the reality is that many who took out bank loans to acquire new cars are hurting badly. There's a glut of ride-hailing cars; wages have collapsed. Banks are collecting on "DUD," -- my moniker for "distressed Uber debt" -- by repossessing vehicles.
Uber's new CEO, Dara Khosrowshahi, says there will be no more exits from global markets (in addition to China, Uber also left Russia). But SoftBank may continue to pursue a strategy of exiting emerging and less profitable markets in exchange for large stakes in competitors.
Related: SoftBank's $80-100 Billion "Vision Fund" Takes Shape
SoftBank to Invest Billions in Uber
SoftBank Devalues Uber by 30% With Latest Offer
SoftBank Acquires 20% of Uber While Massively Devaluing It