SoftBank Group Corp and a group of investors are trying to buy a stake in Uber Technologies Inc at a sizable discount to the ride-hailing company’s US$69 billion valuation, seeking to clinch what would be one of the largest purchases of stock in a private company.
Softbank and partners including investment firms Dragoneer Investment Group and General Atlantic are offering to spend more than US$6 billion for a stake that would value the ride-hailing company at US$48 billion, or about 30 percent lower than the valuation it fetched in its last round of fundraising, according to people familiar with the deal.
Locking in the investment from Japan’s Softbank has been a top priority for new Uber chief executive Dara Khosrowshahi, who sees the deal as chance to close rifts and land a powerful new ally.
Photo: Reuters
The ride-hailing company has had an abysmal year, with its cofounder and former chief executive resigning under pressure, and the company admitting it concealed a hack that exposed personal data of 57 million customers and drivers.
“Softbank’s expectation that it can get shareholders to part with their shares at about US$50 billion builds in all the negative news,” New Street Research analyst Kirk Boodry said. “All of this over the past year has contributed to the downside.”
If it is successful, the Softbank-led coalition would buy at least 14 percent of the shares from existing Uber investors.
The purchase, along with an additional US$1 billion direct investment in the company, would make the group one of Uber’s biggest shareholders, said the people, who asked not to be identified discussing the private terms.
The Softbank coalition would receive two seats on the board if the stock sale is completed.
The offer gives existing shareholders a way to sell equity and unlock some of the value that has been difficult to realize as long as the San Francisco-based company puts off an initial public offering.
Khosrowshahi has said he expects to take Uber public by 2019.
The tender offer was expected to start yesterday, the people said.
While a number of Uber investors have agreed to sell their shares, this part of the process could last as many as 20 business days, the people said.
An Uber spokesman declined to comment.
The expansion of the company’s board and other governance reforms have been attached to passage of the stock sale, upping the stakes.
However, the deal is not done. Shareholders would need to sell at the US$48 billion valuation.
While Softbank’s offer of about US$33 a share is 30 percent less than Uber’s valuation in its last fundraising round, the price would represent a significant windfall for many early investors.
If shareholders do not agree to sell in sufficient numbers, Softbank can raise the price or walk away, the people said.
Softbank shares fell less than 1 percent in Tokyo trading yesterday.
Softbank is eyeing Uber shares after a rocky year — besides the hack and resignation of former chief executive Travis Kalanick, the ride-hailing company has lost ground against its biggest US competitor and faces a high-profile lawsuit from Waymo, the self-driving unit of Alphabet Inc.
Softbank, led by Japanese billionaire Masayoshi Son, raised US$93 billion this year, the largest technology investment fund ever.
He is stepping up investments beyond his wireless business with deals in e-commerce, robotics, semiconductors and satellites.
Softbank already holds stakes in China’s Didi Chuxing (滴滴出行), India’s Ola and Southeast Asia’s Grab, three of the world’s largest ride-hailing companies after Uber.
A Softbank deal with Uber could lead to mergers among the competitors in certain nations.
“It happened in China, it happened in Russia. In India and Southeast Asia, rationalizing the competitive environment makes sense,” Boodry said. “Going forward, ride-sharing in an environment without a lot of competitive pressure looks to be a pretty good business.”
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