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SoftBank wants to buy Uber shares for 30% less; will lower valuation to $48 billion

SoftBank's new offer is close to what Uber was valued at in 2015.

  • Updated: November 28, 2017 10:41 AM IST
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Earlier this month, the Uber board had approved a $10 billion investment offer from Japan’s SoftBank in exchange for a sizable stake. The deal would usher in a new era at Uber, and limit controls of its founder and tarnished former chief executive Travis Kalanick. It would increase the number of directors from 11 to 17 and reduce the stake of existing investors, including Benchmark Capital that has sued Uber for a breach of trust. But, new reports now claim that SoftBank might be negotiating a better deal.

It wants to buy Uber shares at a 30 percent discount, thus lowering the ride-hailing major’s valuation to about $48 billion from its present $69 billion, Bloomberg reports. SoftBank and partners including investment firms Dragoneer Investment Group and General Atlantic are willing to offer about $6 billion for a stake, that will take Uber to two-thirds of its current valuation. If this goes through, SoftBank would hold about 14 percent in Uber, making it one of the largest shareholders in the transportation company. It’ll also hold two board seats once the stock sale is completed.

However, the market doesn’t seem too keen on Uber’s decreased valuation. “SoftBank’s expectation that it can get shareholders to part with their shares at about $50 billion builds in all the negative news. All of this over the past year has contributed to the downside,” an analyst was quoted as saying. SoftBank is essentially offering $33 per Uber share, and if existing shareholders refuse to part with their stake, the Japanese investor “could still walk away”. SoftBank is also expected to make a separate $1 billion investment in the company at $68.5 billion valuation.

SoftBank’s new offer is close to what Uber was worth in 2015, when shares were priced at under $40 apiece for a $51 billion valuation, according to ReutersBut even at a 30-percent discounted price, Uber is the world’s second-most valuable ride-hailing company after China’s Didi Chuxing (which ousted Uber out of the region). SoftBank is an investor in Didi too, and has also infused capital in India’s Ola and Southeast Asia’s Grab — key competitors of Uber in Asia. It is believed that once SoftBank buys into Uber, it would bring about some consolidation in the global ride-hailing sector.

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  • Published Date: November 28, 2017 10:34 AM IST
  • Updated Date: November 28, 2017 10:41 AM IST