DealBook Briefing: What Uber’s Deal with SoftBank Signals

Good Monday morning. Breaking: G.E. just announced plans to halve its dividend to 12 cents a share as part of its turnaround effort. “We understand the importance of this decision to our shareowners and we have not made it lightly,” its C.E.O., John Flannery, said in a statement.
Has the dysfunction at Uber finally ended?

After all, Uber, its investors and SoftBank’s Masa Son have struck enough compromises to move forward with a long-awaited deal that would allow early shareholders to cash out of the ride-hailing colossus. Those concessions included:

• Giving up special voting rights held by early shareholders like the investment firm Benchmark

• Benchmark suspending its lawsuit against Travis Kalanick

• Mr. Kalanick letting Uber’s other directors have a say over the board seats he controls if he ever needs to fill them again

From Greg Bensinger, WSJ:

“It’s a pretty great reset for the company,” said Bradley Tusk, a political strategist and investor in Uber. “Everyone staying in is focused on the possibilities of the future and everyone mired in the past and present can move on.”

What’s next: SoftBank and its partners can proceed with an offer to buy at least 14 percent of Uber’s shares — although they can walk away if they don’t hit that target. (We want to know whether SoftBank can raise its bid and extend the tender if, toward the end of the process, the Japanese conglomerate still looks like it will fall short of its goal.)

The cautious view: Not everyone is convinced that peace has descended upon Uber just yet. “Trust but verify,” an unidentified person told Kara Swisher of Recode.
Continue reading the main story

Advertisement
Continue reading the main story

More in Masa news: Tim Culpan of Bloomberg Gadfly thinks the SoftBank founder has set himself up as “the savior of overpriced start-ups.”

---

Today’s DealBook briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.

The latest front in the tax battle: private equity.

The newest version of the House bill may have done little to meaningfully affect carried interest, but buyout firms are planning to fight back against limits on the deductibility of corporate debt payments. That would make the core business of private equity — buying and selling companies, in deals financed to some degree with borrowed money — much more difficult.

From Madison Marriage, Javier Espinoza and Sam Fleming in the FT:

“There is no particular logic to the reforms. This is really frightening,” said one London-based private equity manager with international holdings, including in the U.S.

Where we now stand: The House is set to vote on its tax plan by the end of the week. Lawmakers in the House and the Senate are scrambling to counter economic models showing that both proposals would ultimately add to the national debt, according to the NYT.

Don’t cut our taxes: More than 400 millionaires and billionaires, from George Soros to the founders of Ben & Jerry, are sending a letter to Congress this week opposing the Republican plans. “This makes no sense,” Bob Crandall, a former American Airlines C.E.O. and a signatory of the letter, told the WaPo.

Some Republican lawmakers have conceded that — contrary to statements by President Trump and party leaders — not all Americans will see their taxes lowered, and some will see their obligations rise, according to the WaPo.

Tax notes

• Critics of the interim commissioner of the I.R.S., David Kautter, have pointed to his work in the private sector helping clients avoid paying billions in taxes. (The Daily Beast)

• In a video, Senators Elizabeth Warren and Al Franken, both Democrats, reached this conclusion about what companies would do with tax cuts: “More money for the investors!” (Ms. Warren’s Twitter)

• California lawmakers and activists think their state is being deliberately punished by congressional Republicans. (NYT)

• One Democratic donor, Stephen Cloobeck, the C.E.O. of Diamond Resorts International, threatened to cut off his support of the party if they didn’t stop criticizing the rich. (Twitter)