Uber says it will accept an investment from Japanese tech investor SoftBank, joining a growing portfolio of U.S. technology investments made by intrepid mogul Masayoshi Son.
The board on Tuesday also passed a resolution to go public by 2019.
SoftBank's investment will be $1 billion to $1.25 billion at the company's last reported valuation of $69 billion, sources told CNBC. SoftBank also hopes to buy a 14 to 17 percent stake of shares from existing shareholders at a discount, the sources said.
One source said that having new board members Ursula Burns (on the phone) and John Thain (in the room) was a "turning point" that helped get the deal done.
The board will go from 11 seats to 17 seats. Softbank will get two and four will be independent, including an independent chairperson. Burns and Thain, who were appointed by board member and former CEO Travis Kalanick, will be allowed to retain their seats.
This is notable because investors Benchmark had previously sued Kalanick to prevent him from filling those board seats. Assuming these governance changes are approved, Benchmark will drop its suit.
Uber told CNBC:
"Today, after welcoming its new directors Ursula Burns and John Thain, the Board voted unanimously to move forward with the proposed investment by SoftBank and with governance changes that would strengthen its independence and ensure equality among all shareholders. SoftBank's interest is an incredible vote of confidence in Uber's business and long-term potential, and we look forward to finalizing the investment in the coming weeks."
Dragoneer Investment Group will also participate in the SoftBank-Uber investment deal.
Kalanick said the investment bodes well for the future as it heads to an IPO. New CEO Dara Khosrowshahi earlier said Uber should go public between 2019 and 2021.
"Today the Board came together collaboratively and took a major step forward in Uber's journey to becoming a world class public company. We approved moving forward with the Softbank transaction and reached unanimous agreement on a new governance framework that will serve Uber well," Kalanick said.
But the deal also strips Kalanick and other early investors of much of their power. Kalanick's large holdings of Class B shares, which awarded him 10-to-1 voting power, will transform so each shareholder has one vote per share, The New York Times reported.
Early investors Shervin Pishevar and Steve Russell, who had super-voting shares, said they planned to file a class-action lawsuit against Uber and the board for stripping those shares of their voting power.
"Today's action by the board was the culmination of a blatant bait and switch, essentially robbing loyal employees, including the more than 200 early founding Uber employees and advisors, of their hard earned shareholder rights worth billions in value," they said.
SoftBank would enter the fray at Uber as the company adjusts to a new CEO amid a series of scandals, including a scathing workplace culture investigation and a regulatory ban in London.
Some of Uber's investors also want to push out a venture capital firm that's been pitted against Kalanick. In addition to Pishevar, a shareholder group including Ron Burkle and Adam Leber are demanding that Benchmark divest some of its shares and step down from the board.