Business / Corporate

SoftBank reportedly offering to buy Uber shares at steep discount

Bloomberg

SoftBank Group Corp. and a group of investors are said to be trying to buy a big stake in Uber Technologies Inc. at a sizable discount to the ride-hailing company’s $69 billion valuation, seeking to clinch what would be one of the largest ever 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 $6 billion for a stake that would value the ride-hailing company at $48 billion, or about 30 percent lower than the valuation it fetched in its most recent round of fundraising.

If it is successful, the SoftBank-led coalition would buy at least 14 percent of the shares from existing Uber investors. The share purchase, along with an additional $1 billion direct investment in the company, would make the group one of Uber’s biggest shareholders, according to sources who asked not to be identified discussing the private terms.

The SoftBank coalition would receive two board seats if the stock sale is completed.

Locking in the investment from SoftBank has been a top priority for new Uber Chief Executive Officer Dara Khosrowshahi, who sees the deal as chance to close rifts and land a powerful new ally.

The share 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 Tuesday, the people said. While a number of Uber shareholders have agreed to sell shares, this part of the process could last as many as 20 business days, according to the sources.

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.

The deal isn’t done, however. Shareholders will need to sell at the $48 billion valuation. While SoftBank’s offer of about $33 a share is 30 percent less than Uber’s valuation at its most-recent fundraising round, the price would represent a significant windfall for many early investors.

If shareholders don’t agree to sell in sufficient numbers, SoftBank can raise the price or walk away, the sources said.

SoftBank eyed Uber shares as the ride-hailing company has had an abysmal 2017: The company’s co-founder and former CEO Travis Kalanick resigned under pressure from investors; its biggest U.S. competitor has gained ground against it; and the company faces a high-profile lawsuit from Waymo, the self-driving unit of Alphabet Inc.

SoftBank, which has a $93 billion technology investment fund, saw an opportunity to buy shares at a discount.