Uber faces bat­tle over ‘de­struc­tive’ law­suit

Ride-ser­vices firm is be­set with scan­dals

Kuwait Times - - TECHNOLOGY -

Ride-ser­vices com­pany Uber is fac­ing a di­vided board of di­rec­tors and angry share­hold­ers af­ter in­vestor Bench­mark Cap­i­tal filed a law­suit against the com­pany’s ousted chief ex­ec­u­tive, Travis Kalan­ick, deal­ing an­other blow to the firm as it strug­gles to re­cover from a se­ries of scan­dals and hire a new leader.

On Fri­day morn­ing, three Uber in­vestors asked Bench­mark to di­vest its shares and step down from Uber Tech­nolo­gies Inc’s board, ac­cord­ing to an email pub­lished by news web­site Ax­ios and con­firmed by Reuters. Also on Fri­day, mem­bers of the board of di­rec­tors sent an email to Uber staff ex­press­ing dis­may over the Bench­mark law­suit, ac­cord­ing to a copy of the note ob­tained by Reuters.

“The Board of Di­rec­tors is disappointed that a dis­agree­ment be­tween share­hold­ers has re­sulted in lit­i­ga­tion,” the di­rec­tors wrote. “The Board has urged both par­ties to re­solve the matter co­op­er­a­tively and quickly, and the Board is tak­ing steps to fa­cil­i­tate that process.”

Bench­mark, in its law­suit filed on Thurs­day, is seek­ing to force Kalan­ick off the board, and ac­cuses him of con­ceal­ing a range of mis­deeds and schem­ing to re­tain power at the com­pany even af­ter he was forced to re­sign as chief ex­ec­u­tive in June.

Bench­mark was among the Uber in­vestors in June who pressed Kalan­ick to step down af­ter a string of set­backs. In­vestors Shervin Pi­she­var of Sherpa Cap­i­tal, Ron Burkle of Yu­caipa Com­pa­nies and Adam Le­ber, an an­gel in­vestor who works for mu­sic com­pany Mav­er­ick, on Fri­day wrote an email to share­hold­ers and board mem­bers call­ing for Bench­mark to re­move it­self from the com­pany board and di­vest enough of its shares so that it would no longer have the right to ap­point other board seats.

“We have in­vestors ready to ac­quire th­ese shares as soon as we re­ceive com­mu­ni­ca­tion from Bench­mark that they are will­ing to withdraw their law­suit and sell a min­i­mum of 75 per­cent of their hold­ings,” the email said, ac­cord­ing to Ax­ios.

Reuters con­firmed the email with a source close to one of the in­vestors. The three in­vestors and Bench­mark could not be reached for com­ment. The di­vi­sion and hos­til­ity emerg­ing among Uber in­vestors and di­rec­tors opens a new front in a highly un­usual public bat­tle for Sil­i­con Val­ley. It is rare for a ven­ture firm to sue the cen­tral fig­ure of a valu­able port­fo­lio com­pany, and equally un­ex­pected for in­vestors to make a counter-move to push out a fel­low in­vestor back­ing the same com­pany.

Pi­she­var, Burkle and Le­ber-who are not mem­bers of the board of di­rec­tors-said Bench­mark’s law­suit harms Uber’s val­u­a­tion, in­ter­feres with fundrais­ing ef­forts and im­pedes the com­pany’s search for a new CEO to re­place Kalan­ick. Bench­mark’s tac­tics are “eth­i­cally du­bi­ous and, crit­i­cally, value-de­struc­tive rather than value en­hanc­ing,” the in­vestors wrote in the email, ac­cord­ing to Ax­ios.

The email from the board of di­rec­tions was signed by Yasir Al-Ru­mayyan, Ryan Graves, Ari­anna Huff­in­g­ton, Wan Ling Martello and David Tru­jillo. Miss­ing were the sig­na­tures of Kalan­ick and Bench­mark board mem­ber Matt Cohler. It as­sured staff that there were “sev­eral out­stand­ing can­di­dates” for the CEO job.

One Uber in­vestor told Reuters that Kalan­ick’s con­tin­ued role at the com­pany has com­pli­cated the CEO search and scared off some good can­di­dates. — Reuters

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